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Building, 
Loan  and  Savings  Associations, 


HOW  TO  ORGANIZE 

AND 

SUCCESSFULLY  CONDUCT  THEM 


EMBRACING 

The  Origin  and  Hixtory  of  G}-operative  Societies ;  Objects  and  Benefits  of  Building 
Associations ;  How  to  Organize  and  Successfully  Conduct  Them ;  Leagues; 
Legislation;    Constitution  and  By-Laws;    Forms  and  Description  of 
Books,  Blanks,  and  Papers;    Interest  and  Dividend  Tables; 
Auditing  and  Supervision;  and  a  Comprehensive  Va- 
riety of  Practical  and  Useful  Information  and 
Suggestions,   with  Special  Features 
Relative  to  Advertising. 


BY 

Henry  S.  Rosenthal 


Third  Edition.     Revised  and  Enlarged. 


AMBIUCAN  BUILDING  ASSOCIATION  NBW8  CO. 
CINCINNATI  CHICAGO 


J*!^. 


I; 


Copyright  1911 

By 

Henry  S.  Rosenthal. 


Preface  to  the  Third  Edition. 


IN  presenting  this,  the  third  edition  of  a  treatise  on 
Building,  Loan  and  Savings  Associations  to  the  public, 
the  author  realizes  that  the  conditions  that  obtained  at 
the  time  of  its  first  publication  have  changed  materially. 
At  that  time  there  was  practically  no  literature  on  this 
subject.  The  different  systems,  the  methods  in  vogue  in 
various  sections  of  the  country  were  little  known  and  less 
understood  outside  of  their  own  locality.  Information 
was  gathered  largely  by  word  of  mouth  and  the  general 
knowledge,  even  among  officers  and  directors,  was 
limited.  Systems  and  practices  grew  up  seemingly 
indigenous  to  the  community  where  they  originated. 
Customs  of  varying  merit,  once  established,  were  adhered 
to  with  a  tenacity  and  local  pride  that  was  commendable 
for  its  honesty  of  purpose,  but  which  did  not  always 
reflect  credit  on  the  wisdom  of  those  responsible.  There 
was  a  dearth  of  practical,  reliable  information  and  a  con- 
sequent divergence  of  practices  and  methods. 

Today  it  is  not  an  exaggeration  to  say  that  a  trans- 
formation has  taken  place.  The  literature  on  the  subject 
has  grown  to  voluminous  proportions.  In  this  respect, 
as  in  many  others,  the  leagues — national,  state  and  local 
— have  been  a  great  incentive.  Through  their  instru- 
mentality data  and  information  have  been  gathered  from 
every  section  of  the  country,  enabling  a  general  knowl- 

[iii] 


221682 


PREFACE. 

edge  of  the  subject.  Many  of  the  state  departments  also 
issue  annual  reports  and  official  documents  for  the  guid- 
ance of  associations.  Publications  devoted  to  the  interests 
of  building,  loan  and  savings  associations  have  appeared 
at  intervals  and  have  added  materially  to  the  literature  on 
the  subject.  Of  these  the  American  Building  Association 
News  was  one  of  the  first  and  is  today  the  sole  survivor 
with  an  uninterrupted  career  extending  over  thirty  years. 

The  relation  of  the  association  to  the  depositor  and 
borrower  alike,  as  well  as  the  details  of  management, 
have  during  this  time  been  more  critically  examined  and 
placed  on  a  scientific  basis.  Practices  that  contained  an 
element  of  danger,  obsolete  customs  and  ambiguous  or 
misleading  terms  of  bargaining  have  been  discarded. 
The  touchstone  of  mutuality  has  been,  and  is  being, 
applied  to  every  feature  and  its  merits  determined  by  that 
standard. 

While  there  were  many  elements  that  contributed  to- 
ward bringing  about  these  changed  conditions,  the  author 
takes  a  pardonable  pride  in  the  fact  that  his  early  effort 
was,  in  a  measure,  a  pioneer  work  in  this  direction  and 
that  he,  in  conjunction  with  the  host  of  public-spirited 
men  and  women  who  have  been  identified  with  the  move- 
ment for  the  past  score  of  years,  may  claim  a  modest 
meed  of  credit  for  having  assisted  in  raising  so  worthy 
an  institution  as  the  building,  loan  and  savings  associa- 
tion to  its  present  dignified  position. 

In  this  spirit  this  volume  is  again  offered  to  the  public. 
While  there  is  an  abundance  of  literature  on  the  subject 
it  nevertheless  exists  mostly  in  a   scattered  and   frag- 

[iv] 


PREFACE. 

mentary  form,  impractical  for  handy  reference.  To 
present  this  information  in  a  concise  and  systematic  form 
is  the  object  of  this  volume.  The  work  has  been  thor- 
oughly revised,  new  features  and  ideas  noted,  and  the 
best  results  of  practical  experience  incorporated. 

To  conclude,  it  is  true  that  sentiment  finds  scant 
recognition  in  business,  but  without  sentiment  building, 
loan  and  savings  associations  would  be  an  impossibility. 
With  the  hope,  therefore,  that  this  work  may,  in  a  modest 
way,  assist  in  realizing  the  sentiment  expressed  in  the 
motto :  **The  American  Home,  the  Safeguard  of  Ameri- 
can Liberties,"  it  is  submitted  to  the  public  for  the  third 
time  by 

The  Author. 


W 


TABLE  OF  CONTENTS. 


CHAPTER  I. 
Co-operative  Effort 

What  Is  Co-operation? 

Origin  of  Co-operation. 

Achievements, 

Co-operative  Efforts  in  the  United  States 1 — 3 

CHAPTER  II. 
Building,   Loan  and  Savings   Associations. 
Name  and  Title. 
Object  of  the  Associations. 
Always  a  Savings  Society. 
Why  Persons  Become  Members. 
A  Simple  Theory. 
Statistical  Information. 
Periodicals  Devoted  to  the  Interests 4 — 12 

CHAPTER  III. 
Historical  Review. 
Societies  in  England. 
Movement  in  France. 
Early  History  in  the  United  States. 
Results  Decidedly  Beneficial. 
Means  to  Financial  Advancement. 
The  Future  of  the  Movement 15—34 

CHAPTER  IV. 
Building  Associations  and  Leagues. 
Purposes  of  Leagues. 
The  United  States  League. 
The  Organization  of  State  Leagues. 
International  League. 
County,  City  and  Local  Leagues. 
What  a  League  Can  Do. 
League  Membership. 
Resume 25—31 

[Tiil 


TABLE  OF  CONTENTS. 

CHAPTER  V. 
Legislation  and  Taxation. 
Its  Necessity. 
Legislation  in  England. 
Provisions  of  the  English  Law. 
Defects  in  the  English  Law. 
Laws  in  the  United  States. 
Litigation. 

Exemption  from  Taxation. 
Exempting  Homesteads  from  Taxation. 

The  Association  in  Reality  a  Clearing  House  for  Its  Members. 
Statesmen  Who  Have  Been  of  Direct  Benefit  to  the  Movement 
Taxation    32-^16 

CHAPTER  VI. 
Forms  of  Associations. 
The  Terminating  Plan. 
The  Serial  Plan. 
The  Perpetual  or  Permanent  Plan 47 — 60 

CHAPTER  VII. 
How  TO  Organize. 
Necessary  Conditions. 
Preliminary  Steps. 
Choice  of  Name. 
Capital  Stock. 
The  Constitution. 
By-Laws. 
Incorporations. 
Officers. 
Headquarters. 
Meetings. 
New    Regulations 61 — 71 

CHAPTER  VIII. 
Stock  and  Stockholders^ 
Stock  and  Shares. 
Increase  of  Stock. 
Stock  as  Property. 

[viiil 


TABLE  OF  CONTENTS. 

Shares  Transferable. 

Stock  Payments  or  Dues. 

Paid-up  Stock. 

Other  Facts  Concerning  Stock, 

Certificates  of  Deposit. 

The  Deposit  Feature  in  Associations T2 — 80 


CHAPTER  IX. 

Definition  of  Stock  and  Stockholders. 

Difference  Defined. 

Serial  Associations. 

Borrowing  Members. 

Safety  of  these  Associations 81 — 85 


CHAPTER  X. 

Insurance. 

Insurance  Features. 

Health,  Accident  and  Disability  Insurance. 

Tornado  Insurance. 

Life    Insurance 86 — 89 


CHAPTER  XL 

Duties  and  Rights  of  Membbks. 

Membership. 

Duties  of  Members. 

Fines  and  Forfeitures. 

Rights  of  Members. 

Corporate  Rights  of  Members. 

Rights  as  Investors. 

Dividends. 

Right  of  Withdrawal. 

Rights  of  Borrowers. 

Duties  of  Borrowers 90—101 


[«3 


TABLE  OF  CONTENTS. 

CHAPTER  XII. 

Loans  and  Securities. 

Premiums. 

Nature  of  a  Loan. 

Mortgages. 

Other  Securities. 

Assignment  of  Stock. 

Sale  of  Securities;  Disposition  of  Proceeds. 

Appraisement  of  Real  Estate. 

Expert  Appraisers. 

Straight  Mortgage   Loans 102—109 


CHAPTER  XIII. 

Corporate  Government. 

The  Corporate  Meeting. 

General  Meetings. 

Special  Meetings. 

Management  of  Corporate  Meetings. 

Officers :  Their  Election  and  General  Powers 110 — 116 

CHAPTER  XIV. 

Election  and  Duties  of  Officers. 

Officers  Required. 

Elections. 

Duties  of  President  and  Vice-President. 

Duties  of  Secretary. 

Assistant  Secretaries. 

Duties  of  Treasurer. 

General  Manager. 

Duties  of  Directors. 

Duties  of  Trustees. 

The  Attorney:  His  Appointment,  Duties  and  Compensation. 

Bonds  of  Officers. 

Surety  Bonds. 

Responsibilities  of  Officers. 

Remuneration  of  Officers. 

Salary  of  Directors, 

Salary  of  Secretary 117 — 138 

Ex] 


TABLE  OF  CONTENTS. 

CHAPTER  XV. 

Powers  and  Liabilities. 

General  Powers. 

Perpetual  Succession. 

The  Corporate  Seal. 

Contracts  and  Agents. 

Suits. 

Rules. 

Special  Powers. 

Dissolution    139—146 


CHAPTER  XVI. 

Practical  Questions  Answered. 

Borrowing  Money. 

Contingent  or  Reserve  Fund. 

Undivided  Profits. 

Quick  Assets. 

Mortgages:  Custody,  Recording,  etc. 

Insurance  Policies  as  Collateral  Security. 

Leaseholds. 

Taxes  and  Assessments. 

Payment  of  Dividends. 

Dues,  Deposit  Slips,  etc. 

Paying  oflF  Shares 147—166 


CHAPTER  XVII. 

Auditing:  Its  Necessity  and  Object. 

State  Examinations. 
Purposes  of  Auditing. 
Protection  of  Corporate  Interests. 
Protection  of  Members. 
Statutory  and  Constitutional  Requirements. 
Economical,  Labor-Saving  and  Simple  Methods. 
The  Balance  Sheet. 

The  Auditor  the  Representative  of  the  Members. 
The  Selection  of  an  Auditing  Committee. 

[xi] 


TABLE  OF  CONTENTS. 

Qualifications  for  Auditing. 

Disqualification  of  Auditors. 

Assistance  from  Officials. 

Change  of  Auditors. 

Compensation  of  Auditors 166—186 


CHAPTER  XVIII. 

Auditing:  Its  Methods. 

Uniformity  Impossible. 

Care  of  Books. 

Special  Hints. 

False  Accounts. 

Errors  of  Omission. 

General  Outline. 

Share  Contributions. 

Proving  a  Cash  Balance. 

Secretary's  Contribution  Book. 

Monthly  Secretary's  Book. 

Secretary's  Cash  Book. 

Treasurer's  Cash  Book. 

Members'  Ledger. 

Withdrawals. 

General  Ledger. 

Assets  and  Liabilities. 

Auditor's  Report  on  Special  Matters. 

Auditor's  Certificate. 

Safety  Insured. 

State   Supervision 187 — ^211 


CHAPTER  XIX. 

Reports. 

Their  Necessity. 

Legal  Requirements. 

Preparation  and  Publication  of  Reports. 

Secretarjr's  Balance  Sheet. 

Specimen   Reports 212 — ^220 


TABLE  OF  CONTENTS. 

CHAPTER  XX. 

Rebate  and  Compound  Interest  Tables. 

Explanation  and  Remarks, 

Perpetual  Calendar. 

Fundamental  Principles  of  Building  Associations. 

Comparisons  of  Earnings. 

Sources  of  Profit. 

Declaring  25^%   Dividends   Semi-Annually. 

Perpetual  Weekly  Calendar 221—261 


CHAPTER  XXI. 

Distribution  of  Earnings — Permanent  Plan. 

Calculation  of  Dividends  and  Interest. 

Application  of  Profits. 

Permanent  Plan — System  I. 

Tables  for  Permanent  Plan. 

Permanent  Plan — System  II. 

Tables  for  Permanent  Plan 252—301 


CHAPTER  XXII. 

Distribution  of  Earnings — Serial  Plan. 

Distribution  of  Earnings. 

Division  of  Profits — Serial  Plan. 

Earning  Powers. 

Rules  and  Tables  Exemplifying  the  Division  of  Profits  Under 

Dexter's  Rule  and  the  Partnership  Rule 302—321 


CHAPTER  XXIII. 

Legal  Forms  for  AssoaATioNs. 

Specimen  Blanks. 

Articles  of  Incorporation  (Ohio). 

Subscription  List. 

Proxy  on  Stock. 

Bond  of  Officers  (Ohio). 

Mortgage   (Ohio). 

[xiiil 


TABLE  OF  CONTENTS. 

Mortgage  Clause  for  Insurance  Policies. 

Mortgage  Collateral  Note  on  Shares  of  Stock. 

Mechanics'  Lien  (Ohio). 

Collateral  Note  for  Loan  on  Pass-Book. 

Attorney's  Report. 

Certificate  of  Paid-up  Stock 322—335 

CHAPTER  XXIV. 
Books  and  Blanks. 

General  Suggestions. 

Book  Account. 

Pass-Books. 

Deposit  Envelopes  and  Slips. 

Necessary  Books  and  Forms. 

Building  Association  Supplies 336 — 347 

CHAPTER  XXV. 
Juvenile  Savings. 

CHAPTER  XXVI. 

Advertising. 

Why  Should  You  Advertise? 

How  Should  You  Advertise? 

The  Preparation  of  Advertisements. 

Appendix. 

Technical  Data. 

Printing. 

The  Printer's  Point  System. 

Papers. 

Illustrations. 

Bill  Posting. 

Street  Car  Advertising 348—372 

APPENDIX. 
Laws   of   Ohio   Relating  to   Building   and   Loan    Associations. 
Organization. 
Powers. 

[xiv] 


TABLE  OF  CONTENTS. 

Regulations.    Bond  of  Officers. 

Reserve  Fund. 

Division  of  Earnings. 

Taxation. 

Inspection. 

Foreign  Associations. 

Annual  Report  of  Associations. 

Examination  of  Associations. 

Fees. 

Penalties. 

Dividends. 

Fee  Bill  of  Secretary  of  State. 

Rights  Granted  and  Liabilities  Imposed  by  the  New  Ohio  Law. 

Constitution. 

By-Laws. 

Rules    373-411 


[rrj 


CHAPTER  I. 


Co-operative  Effort. 


WHAT  IS  CO-OPERATION? 

Co-operation  as  a  system  consists  in  a  joint  stock  co- 
partnery on  ordinary  commercial  principles  with  limited 
liability  of  members.  By  the  adoption  of  wise  precautions 
and  prudent  methods,  and  through  the  interposition  of 
judicious  legislation  defining  corporate  powers,  and  pro- 
tecting individual  interests,  the  principle  of  co-operation 
does  much  to  encourage  self-denial  and  thrift  on  the  part 
of  individuals,  and  to  develop  and  foster  the  material 
interests  and  moral  welfare  of  communities. 

ORIGIN  OF  CO-OPERATION. 

As  a  practical  result  in  the  organization  of  co-opera- 
tive societies,  the  principle  of  co-operation  was  evolved. 
Such  organizations  are  almost  coeval  with  civilization 
itself,  and  have  existed  in  some  form  or  another  in  every 
enlightened  nation.  There  is  no  authenticated  history  of 
the  operation  of  the  first  co-operative  societies,  but  it  is  I 
reported  that  the  very  first  successful  organizations  were 
established  in  the  Chinese  Empire,  many  centuries  ago. 

During  the  last  period  of  the  eighteenth  century  we  see 
the  foundation  of  what  is  termed,  modern  co-operation. 

[1] 


;t:;:^':n  ■  c. ;  >  chapter  l 

This  was  successfully  established  in  England  at  that  time. 
From  this  beginning  have  sprung  colossal  co-operative 
merchandising,  manufacturing  and  distributive  institu- 
tions, the  output  of  which  is  enormous.  The  many  suc- 
cessful institutions  that  are  now  in  operation  in  England 
have  won  the  admiration  of  the  commercial  and  financial 
world. 

From  the  good  results  obtained,  not  only  in  England, 
but  in  all  British  possessions,  the  principles  have  been 
copied  by  the  various  European  nations,  and  thus  we  find 
in  Germany,  France,  Austria,  Russia,  Italy  and  other 
European  countries,  a  development  that  has  truly  been 
phenomenal. 

ACHIEVEMENTS. 

As  a  result  of  these  societies,  and  for  whatever  purpose, 
they  have  been  the  same  in  essential  plan  and  nature.  They 
spring  up  out  of  the  same  conditions  and  minister  to  the 
same  necessities  and  achieve  the  same  results.  To  organ- 
ize such  an  institution  successfully,  there  must  be  a  popula- 
tion consisting  mainly  of  persons  of  small  incomes,  and 
generally  dependent  upon  their  daily  labor  for  these 
incomes.  These  persons  must  have  intelligence  and 
similarity  of  interests  and  tastes,  and  there  must  be  a 
strong  element  of  mutual  trust  and  dependence.  Condi- 
tions such  as  these  are  to  be  found  greatest  among  the 
laboring  classes,  clerks,  shop  and  store  assistants,  etc. 
By  uniting  a  portion  of  their  earnings,  these  classes  can 
successfully  accomplish  the  furnishing  of  capital  to  achieve 
their  purposes.     When  this  is  done  upon  an  economical 

[2] 


CO-OPERATIVE  EFFORT. 

and  prudently  devised  basis,  advantages  are  secured  which 
would  be  impossible  to  those  interested,  as  individuals. 
Inasmuch  as  the  populations  of  the  various  countries  are 
made  up  of  people  of  these  classes  and  conditions,  their 
necessities  are  practically  the  same,  and  therefore  we  find 
a  similarity  in  the  efforts  made  to  meet  these  necessities. 

CO-OPERATIVE  EFFORTS   IN  THE  UNITED   STATES. 

It  is  rather  strange  that  in  the  United  States  there 
have  been  so  many  experiments  along  the  lines  of  co- 
operative effort  in  manufacturing,  merchandising  and 
distribution  that  have  not  met  with  any  degree  of  success. 
While  there  have  been  some  instances  where  the  work 
done  in  this  direction  has  met  with  success,  yet  there  are 
few  cases  to  record  that  evidence  much  prosperity  along 
these  lines.  Perhaps  this  is  due  to  the  fact  that  there  is  a 
lack  of  experience  to  guide  co-operative  effort  as  is  found 
in  Great  Britain  and  Germany.  Undoubtedly  unfavorable 
conditions,  inexperienced  management  and  the  lack  of 
necessary  legal  restraints  and  official  supervision  have 
brought  failure  to  many  of  the  attempts  made  in  this 
direction. 

One  form  of  co-operative  effort,  however,  has  been 
remarkably  successful  in  this  country.  This  is  found  in 
the  Building,  Loan  and  Savings  Associations,  of  which  it 
is  the  purpose  of  this  work  to  treat.  Conditions  have 
especially  favored  the  organization  of  these  societies.  As 
a  result  the  building,  loan  and  savings  associations  of  the 
United  States  now  exceed,  in  combined  assets  and  mem- 
bership, those  of  all  other  countries. 

[3] 


CHAPTER  II. 


Building,  Loan  and  Savings  Associations. 

NAME  AND  TITLE. 

The  term  "Building  and  Loan  Association/'  has  been 
used  in  a  general  way,  although  we  find  institutions  of 
the  same  character  that  operate  as  Homestead  and  Build- 
ing Associations,  Mutual  Loan  Associations,  Co-operative 
Banks,  Co-operative  Savings  and  Loan  Associations,  Sav- 
ings Fund  and  Loan  Associations,  Savings  and  Building 
Associations,  Savings  and  Loan  Companies,  and  other 
titles  of  like  nature. 

OBJECT  OF  THE  ASSOCIATIONS. 

The  object  of  these  associations  is  to  furnish  persons  of 
limited  means  and  small  incomes  an  avenue  to  invest  their 
earnings  safely.  While  the  principal  object  of  these  asso- 
ciations is  to  enable  the  wage  earner  and  those  of  limited 
incomes  to  secure  these  combined  savings  for  the  purpose 
of  building  or  purchasing  a  home,  the  general  public 
from  the  practice,  work  and  nature  of  these  associations 
have  mistaken  ideas  as  to  their  real  character.  The  proper 
title  for  an  organization  of  this  kind  would  be(j'Co-opera- 
tive  Savinga  and  Loan  Association."  The  use  of  the  word 
"Building"  in  the  name  of  these  associations  is  traditional, 

[4] 


BUILDING,  LOAN  AND  SAVINGS  ASSOCIATIONS. 

having  been  handed  down  from  the  first  co-operative 
societies  of  this  character,  which  were  organized  in  Eng- 
land, and  known  as  ''Building  Societies." 

ALWAYS   A    SAVINGS    SOCIETY. 

Therefore,  the  so-called  association,  while  not  nece^ 
sarily  a  building  association,  is  always  a  Vo-operativs 
saving  society,  and  a  loan  association.  It  is  a  money 
saving  institution,  in  that  a  necessary  part  of  its  system 
requires  its  members  to  deposit  such  portions  of  their 
earnings  or  incomes  as  they  can  afford  to  lay  aside  in  this 
manner.  It  is  a  money  making  institution,  in  that  the 
funds  thus  accumulated  are  so  used  and  applied  as  to 
secure  for  the  association  such  rates  of  interest  as  are 
obtainablejin  the  open  markets  of  the  worldj  It  is  a  money 
loaning  institution,,  in  that  it  undertakes  to  advance  or 
loan  to ^3ts\ members,)  upon  acceptable  security,  such 
amounts  as  from  time  to  time  their  necessities  demand,  and 
their  circumstances  will  allow  them  to  borrow,  [it  is  the 
popular  institution  among  that  class  of  persons  who 
compose  the  membership  of  such  associations,  because  it 
is  mutual  and  democratic  in  its  character,  each  member 
sharing  equitably  in  all  its  advantages  and  privileges,  and  . 
having  an  equal  voice  in  the  administration  of  its  affairs.  ) 

WHY  PERSONS  BECOME  MEMBERS. 

There  are  various  reasons  why  persons  should  affiliate 
themselves  with  this  movement.  In  the  first  place,  they  are 
sought  because  they  are  a  safe  depository  for  slowly 
accumulating  funds,  and  because  the  people  know  their 

[5] 


CHAPTER  II. 

savings  are  safer  when  they  are  thus  deposited  than  if 
retained  in  their  own  possession.  Such  persons  find  a 
strong  inducement  to  become  members,  because  the  asso- 
ciation provides  a  safe  and  convenient  method  of  investing 
their  small  means,  at  the  best  rate  of  interest  obtainable. 
Others  again  use  the  associations  as  they  would  a  savings 
bank  for  the  purpose  of  accumulating  a  fund  to  purchase 
a  lot  or  home,  to  embark  in  business  or  some  other  form 
of  investment  later  on.  Many  persons  are  members  of  the 
associations  because  of  the  privilege  they  thereby  obtain 
of  anticipating  the  future,  and  securing  the  immediate  use 
of  money  which  they  will  gradually  return  by  depositing 
from  week  to  week,  or  month  to  month,  as  the  case  may 
be,  a  portion  of  their  regular  earnings.  Associations  will 
advance  to  this  class  of  members  certain  amounts  of 
money,  the  payment  of  which  in  installments  is  secured 
by  the  pledge  of  the  stock  of  the  member  and  the  mortgage 
of  some  approved  real  estate,  or  in  some  cases  the  deposit- 
ing of  other  acceptable  collaterals  as  security. 

A  SIMPLE  THEORY. 

Therefore,  the  theory  of  these  associations  is  a  simple 
one.  The  money  is  collected  in  comparatively  small  sums 
from  large  numbers  of  people,  and  loaned  to  others  who 
borrow  upon  real  property  or  other  approved  security, 
either  to  build  homes,  to  enter  business,  or  for  other 
purposes.  These  associations  are  most  popular  when  they 
adhere  to  the  objects  which  they  set  out  to  attain.  Co- 
operation in  the  form  of  this  class  of  associations,  fur- 
nishes such  persons  an  opportunity  for  regular,  systematic 

[6] 


BUILDING,  LOAN  AND  SAVINGS  ASSOCIATIONS. 

and  compulsory  savings,  or  to  anticipate  them  by  borrow- 
ing for  the  purpose  of  purchasing  and  holding  real  prop- 
erty in  their  own  names  or  to  secure  special  advantages 
in  other  directions,  impossible  for  them  under  the  prevail- 
ing commercial  and  financial  conditions.  Originally  mem- 
bers of  associations  were  permitted  to  subscribe  only  fixed 
sums  at  stated  intervals.  The  evolution  of  this  idea  has 
been  to  grant  every  facility  for  the  varying  powers  of 
investment,  and  to  find  a  place  for  capital,  be  it  a  small  or 
large  amount,  so  that  now  entrance  and  withdrawal  are 
equally  easy.  The  policy  and  methods  of  associations 
have  been  varied  to  meet  the  convenience  and  necessities 
of  the  membership,  thereby  popularizing  them  and  render- 
ing them  more  successful  in  their  achievements. 

STATISTICAL  INFORMATION. 

The  ninth  annual  report  of  the  Department  of  Labor 
for  the  year  1893,  by  the  Hon.  Carroll  D.  Wright,  Com- 
missioner, was  prepared  and  published  in  Washington  in 
the  year  1894.  This  was  the  first  correct  and  authentic 
compilation  of  statistics  that  had  ever  been  gathered 
relating  to  the  building,  loan  and  savings  association 
movement  of  the  United  States.  In  this  report  the  fol- 
lowing statistics  appeared : 


[7] 


CHAPTER  11. 

Number  of  associations 5,838 

Male  shareholders  in  associations  reporting 919,614 

Female  shareholders  in  associations  reporting 307,828 

Total  shareholders  in  associations  reporting 1,745,725 

Average  shareholders  per  associations  reporting 301.2 

Shareholders  who  are  borrowers  in  associations  reporting        455,411 

Per  cent  of  borrowers  in  associations  reporting 26.25 

Number  of  shares  in  associations  reporting 13,255,872 

Total  dues  and  profits $450,667,594 

Average  shares  per  shareholder  in  associations  reporting  7.5 

Average  dues  and  profits  per  shareholder  in  associations 

reporting   $        257.26 

Average  value  of  shares  in  associations  reporting $  34.18 

Total  profits $  80,664,116 

Average  size  of  loans  in  associations  reporting $  1,120 

Homes  acquired  in  associations  reporting 314,755 

At  the  time  of  the  preparation  of  this  report  it  could  be 
seen  that  the  number  of  associations  doing  business  as 
nationals,  was  240.  This  method  of  doing  business  has 
been  discontinued  almost  entirely. 

The  statistics  available  show  the  standing  of  the  build- 
ing association  movement  as  reported  from  year  to  year 
by  Mr.  H.  F.  Cellarius,  Secretary  of  the  United  States 
League  of  local  building  and  loan  associations.  The 
figures  for  the  business  covering  1909  are  as  follows ; 


[8] 


BUILDING,  LOAN  AND  SAVINGS  ASSOCIATIONS. 

No.        Total  Increase      Increase 

States.                               of      Member-  Total  in            in  Mem- 

Ass'ns.      ship.  Assets.  Assets.       bership. 

1  Pennsylvania    ....1,450    400,000  $171,500,000  $12,989,255    10,554 

2  Ohio   647    328,866  153,504,501  14,164,077      1,204 

3  New   Jersey 477    164,569  78,788,161  5,269,927      8,263 

4  Illinois    524    118,994  58,444,972  4,131,506    10,260 

5  Massachusetts    ...    140    129,619  55,945,634  4,605,731      9,044 

6  New  York    247    114,436  42,070,940  2,908,338      6,236 

7  Indiana 327    120,500  35,934,418  1,803,002         422 

8  California   105      30,839  20,228,116  592,449       *303 

9  Nebraska  70      49,441  17,094,771  3,678,949      6,758 

10  Michigan   59      41,188  16,304,383  1,247,890      2,006 

11  Dist.  of  Columbia     22      27,125  14,393,927        

12  Louisiana  59      29,800  13,461,091  1,937,437      2,437 

13  Missouri   128      23,717  10,168,631  867,970      2,019 

14  Kansas*  58      39.114  10,107,663  4,328,465    21,454 

15  North  Carolina  . .     98      23,789  6,791,619  770,198    *2,487 

16  Wisconsin    53      14,517  5,268,853  538,159      2,002 

17  Minnesota  *  67      11,022  4.559,027        

18  Iowa'  48      15,300  4,390,443        

19  W.  Virginia 38      11,460  4,283.728  169,844         230 

•20  Maine    35        9,691  4,085,811  216,669         262 

21  Tennessee    15        5,360  2.800,917  72,614         145 

22  Connecticut   11        2,864  2,096,523  197,693         *27 

23  New  Hampshire..  17  7,400  2,016,861  38,734  150 
.24  North  Dakota....       9       3,125  1.785.782  287.960        525 

Other  states 1.000    293.915  120,305,947  11,340,099    15,240 

Total  5,713  2.016,651  $856,332,719  $72,156,966    96,374 

Thus  it  will  be  seen  that  during  the  period  intervening 

between  the  two  reports  the  number  of  associations  has 
not  increased,  while  the  total  holdings  have  increased 
about  100%. 


*  Decrease. 

^  Including  3  general  associations. 

*  Reports  made  biennially. 


f9] 


CHAPTER  11. 

PERIODICALS  DEVOTED  TO  THE  INTERESTS. 

There  have  been  a  number  of  periodicals  devoted  to 
this  interest,  published  in  the  various  parts  of  the  United 
States.  From  lack  of  support  by  the  associations  and 
membership,  these  have  all  ceased  publication,  excepting 
that  at  the  present  time  there  is  published  The  American 
Building  Association  News,  which  was  founded  in- 
1880  and  published  at  Cincinnati  and  Chicago.  This 
journal  is  the  recognized  authority  on  all  matters  pertain- 
ing to  building  and  loan  association  affairs.  It  has  been 
declared  the  official  organ  of  the  U.  S.  League  and  the 
various  other  leagues  in  the  different  states.  It  has  proven 
an  important  factor  in  protecting  the  interests  of  these 
institutions,  and  on  many  occasions  its  educational  value 
to  the  legislators  has  been  recognized.  Every  association 
in  the  United  States  should  have  a  copy  of  this  journal  at 
its  meeting  place,  and  should  mail  regularly,  at  the  expense 
of  the  association,  a  copy  to  the  home  of  each  director,  so 
that  they  may  become  posted  on  all  important  matters 
that  transpire.  The  many  useful  features,  its  editorial, 
legislative,  statistical,  advertising,  judicial,  and  all  general 
news  affecting  those  interests,  make  this  journal  indis- 
pensable to  those  who  have  the  management  of  these 
associations  entrusted  to  them.  It  is  to  be  hoped  that  in 
the  near  future  the  work  of  this  journal  can  be  carried  in 
a  more  popular  form  to  the  members  of  these  institutions. 
The  associations  could  order  bulk  editions  with  advertis- 
ing matter  of  the  different  associations  inserted,  and 
distribute  them  to  the  membership  and  to  everyone  they 
wish  to  interest  in  this  work.    There  are  at  present  a  num- 

[10] 


BUILDING,  LOAN  AND  SAVINGS  ASSOCIATIONS. 

ber  of  associations  that  have  begun  to  follow  out  this  idea, 
with  remarkable  success. 

The  necessity  for  all  the  associations  of  the  United 
States  to  become  subscribers  to  a  paper  of  this  character 
is  particularly  apparent  at  a  time  of  need  for  proper  legisla- 
tion. A  notable  instance  of  this  kind  was  furnished  when 
the  corporation  tax  bill  was  under  consideration  before 
Congress  in  1909.  The  committee  on  finance  of  the 
Senate  had  refused  to  allow  proper  exemptions  to  build- 
ing, loan  and  savings  associations  in  their  report  to  that 
body.  When  this  fact  became  known,  the  publishers  of 
this  journal,  together  with  the  leading  officials  of  the 
various  leagues  of  the  United  States,  set  about  immediately 
to  create  public  opinion  in  favor  of  the  importance  of 
securing  an  amendment  to  the  corporation  tax  bill,  exempt- 
ing these  associations.  The  result  was  wonderful,  and  it 
was  only  through  the  efforts  coming  from  all  parts  of  the 
Union  at  one  time,  that  made  success  possible.  The  recog- 
nition secured  by  the  associations  from  Congress  in  such 
important  legislation,  must  not  be  measured  alone  by  the 
actual  financial  savings  to  each  association.  The  standing 
given  to  the  associations  in  such  a  manner  tends  to  help 
this  work  from  an  advertising  point  of  view. 

In  the  future  many  important  problems  will  develop 
from  time  to  time,  of  which  some  will  doubtless  be  vital 
to  the  continuance  of  the  work  of  these  associations.  As 
an  instance,  the  proposed  federal  income  tax  may  be  cited, 
which  at  the  present  time  is  before  the  various  state  leg- 
islatures for  action.  Almost  every  day,  progress  is  reported 
in  some  of  the  states,  favoring  this  amendment  to  the  fed- 

[11] 


CHAPTER  11. 

eral  constitution.  The  result  will  doubtless  be  that  at  some 
time  or  other  the  income  tax  proposition  will  be  before 
Congress.  When  this  time  arrives,  it  will  be  necessary  for 
the  entire  movement  of  the  United  States  to  present  a 
united  front,  demanding  proper  exemption.  There  is  only 
one  avenue  through  which  an  agitation  of  this  kind  can  be 
crystallized  at  the  present  time,  and  that  is  through  the 
American  Building  Association  News,  and  it  is  there- 
fore of  paramount  importance  for  all  directors  to  be 
informed  as  to  the  true  situation,  not  only  of  legislative, 
but  other  matters  also. 

The  many  new  ideas  that  are  brought  forward  in  the 
matter  of  book-keeping,  the  many  papers  that  are  read 
before  the  various  state  leagues,  the  new  interpretation  of 
judicial  proceedings  are  all  important,  and  those  interested 
should  make  it  their  duty  to  know  the  exact  status  of 
affairs. 


fl2] 


CHAPTER  III. 


Historical  Review. 


SOCIETIES  IN  ENGLAND. 

Building  societies  existed  as  early  as  1798  in  England, 
The  first  full  and  authentic  account  is  that  of  the  Union 
Building  Association,  founded  at  Greenwich,  England, 
in  January,  1809.  The  purpose  of  this  organization,  as 
declared  in  its  rules  and  regulations,  was  the  raising  by 
monthly  subscriptions  of  a  fund  to  be  expended  in  build- 
ing houses.  These  houses,  as  they  were  built,  were  deeded 
to  the  different  members  of  the  association.  The  member- 
ship of  this  society  was  restricted  to  the  number  of  fifty, 
the  whole  number  of  shares  was  two  hundred,  of  a  value 
£210  each.  Payments  were  made  in  monthly  installments 
of  two  guineas  each.  A  member  was  subjected  to  a  fine 
in  default  of  payment,  and  if  he  continued  to  fail  to  make 
his  payments,  the  money  already  paid  in  was  under  certain 
conditions  forfeited  to  the  society.  Every  share  in  this 
association  represented  a  dwelling  house.  The  houses 
were  built  under  the  supervision  of  the  society's  inspector 
and  by  certain  tradesmen  specified  in  its  articles.  They 
were  distributed  among  the  members  by  lot,  a  new  house 
being  built  as  often  as  the  society  had  sufficient  funds. 

[13] 


CHAPTER  III. 

From  the  time  a  house  was  finished  the  member  owning 
it  paid  to  the  society  five  per  cent  per  annum  and  his  share 
of  £210  until  the  close  of  the  society,  at  which  time  each 
member  should  have  paid  in  the  full  amount  of  the  share 
held  by  him.  Members  who  were  successful  in  the  draw- 
ings were  compelled  to  give  satisfactory  security  for  the 
money  advanced  them  for  their  houses.  There  were  various 
other  rules  connected  with  the  operation  of  this  early 
building  association  which  are  quite  interesting,  but  which 
cannot  be  enumerated  here. 

One  of  the  earliest  building  associations  established  was 
that  by  the  Earl  of  Selkirk  at  Kircudbright,  in  the  southern 
part  of  Scotland,  in  1815.  The  Earl  of  Selkirk  was  a 
gentleman  of  large  means,  and  philanthropic  ideas.  He  is 
said  to  have  spent  considerable  time  and  study  in  perfect- 
ing and  developing  the  scheme  of  this  society.  The  organ- 
ization of  similar  societies  gradually  extended  into  the 
manufacturing  districts  of  England,  Wales  and  Ireland. 
They  were  afterwards  established  in  London,  and  soon 
became  general  throughout  Great  Britain,  Australia  and 
the  other  British  possessions.  In  1836  they  had  grown  to 
such  public  importance  that  an  act  of  parliament  was 
passed  affording  facilities  for  their  formation  and  provid- 
ing for  their  government  and  management.  Since  that 
period  they  have  had  a  flourishing  growth.  They  report 
to  the  registrar  who  publishes  annual  statistics.  Appended 
are  the  official  figures  as  far  as  obtainable  for  1908 : 


[14] 


HISTORICAL  REVIEW. 

Number  of  societies  in  the  United  Kingdom. . .  1,919 

Numbers  of  societies  making  returns 1,864 

Total  number  of  members 622,614 

Total  receipts  during  the  last  financial  year. .  £41,025,198 

Number    of    societies    making    advances    on 

mortgage   1,423 

Amount  advanced  on  mortgage  during  the  year  £  9,041,613 

Liabilities: 

To  the  holders  of  shares £44,349,406 

To  depositors  and  other  creditors 25,582,290    £69,931,696 

Undivided  profits   £  4,112,693 

Assets: 
Balance    due    on    mortgage    securities     (not 

including  prospective  interest) £58,379,215 

Amount  invested  in  other  securities  and  cash  15,592,354    £73,971,569 

MOVEMENT  IN  FRANCE. 

The  good  work  accomplished  in  the  United  States  has 
caused  co-operators  in  other  countries  to  obtain  informa- 
tion from  the  institutions  so  successfully  established  here. 
In  France,  Dr.  Charles  Pranard,  having  been  a  close 
student  of  this  movement,  prepared  at  the  request  of  the 
French  government,  documents  covering  the  work  in  the 
United  States.  Dr.  Pranard  has  published  a  work  on  this 
subject.  As  a  result  of  this,  the  government  of  France 
has  passed  legislation  exempting  associations  organized 
in  France  from  taxation,  which  should  have  the  effect  of 
rapidly  multiplying  these  organizations  in  the  French 
Republic. 

Spain,  Italy,  Germany,  Austria  and  other  European 
countries  are  following  in  the  same  lines,  and  thus  it  will 
be  seen  that  as  an  educational  factor  the  good  achieve- 
ments on  American  soil  and  the  spread  of  the  co-operative 
savings  and  home  building  idea  will  obtain  a  firm  foot- 
hold not  only  in  Europe,  but  all  over  the  world. 

[15] 


CHAPTER  III. 

EARLY  HISTORY  IN  THE  UNITED  STATES. 

The  first  organization  in  the  United  States  was  that  of 
the  Oxford  Provident  Building  Association  of  Frankford, 
a  suburb  of  Philadelphia,  January,  1831.  Gustav  Korner, 
in  his  book  "The  German  Element  in  the  United  States,"* 
speaking  of  the  influential  and  public-spirited  German 
citizens  of  Pennsylvania  (pages  Y3  and  74),  says  of  Dr. 
William  Schmole:  "In  the  year  1846  he  returned  to 
Philadelphia  *  *  *  We  have  especially  to  thank  him  for 
the  establishment  of  the  first  building  association  in  Phila- 
delphia, which  was  organized  under  the  name  of  The 
American  Deposit  and  Building  Association.'**  He  was 
also  the  founder  of  numerous  other  societies  of  this  kind." 
It  seems  to  be  well  established  that  the  first  association  in 
this  country  was  formed  in  Philadelphia.  Dr.  Schmole, 
through  his  brother  residing  in  Brooklyn,  N.  Y.,  succeeded 
in  organizing  in  the  same  year  an  association  in  that  city 
under  the  name  of  "The  Brooklyn  Mutual  Deposit  and 
Building  Association."!  In  the  following  year,  184t, 
through  his  friend  Wolsieffer,  Dr.  Schmole  secured  the 
organization  of  an  association  in  Baltimore,  Md. 

Similar  organizations  appeared  soon  afterwards  in 
New  York  City,  Newark  and  Hoboken,  N.  J. ;  Boston, 
Mass.,  and  in  other  cities  of  the  north,  and  in  1850  their 
formation  was  begun  in  Charleston,  S.  C,  Savannah, 
Ga.,  and  other  prominent  southern  cities.  Associations 
continued  to  spring  up  from  time  to  time  throughout  the 


*  Das  Deutsche  Element  in  den  Vereinigten  Staaten. 

**  Amerikaniscber  Darlehen  und  Bau-Verein. 

t  Brooklyner  Gegenseitiger  Darlehen  und  Bau-Verein. 

[16] 


HISTORICAL  REVIEW. 

country,  until  they  are  now  established  in  every  state 
and  territory  in  the  Union. 

The  first  association  in  Cincinnati,  Ohio,  was  organized 
July  8,  1868.  Dr.  Keck  was  founder  of  the  first  associa- 
tion in  the  State  of  Ohio.  The  Mutual  Home  and  Sav- 
ings Association,  of  Dayton,  O.,  was  organized  in  1871. 
As  a  result  of  the  successful  operation  of  these  associa- 
tions in  these  localities  they  spread  rapidly  into  the  sur- 
rounding cities. 

From  Ohio,  associations  spread  into  Kentucky,  Indiana, 
Michigan,  Illinois,  Iowa,  Nebraska,  Missouri,  Kansas  and 
in  other  states  and  territories. 

RESULTS  DECIDEDLY  BENEFICIAL. 

The  results  which  follow  the  establishment  of  these  asso- 
ciations are  well  illustrated  in  the  City  of  Philadelphia, 
where  the  first  one  was  established.  Probably  one-half 
of  the  dwelling  houses  in  this  city  have  been  built  through 
the  agency  of  the  associations  and  much  of  the  permanent 
prosperity  of  the  city's  population  is  doubtless  due  to  their 
introduction.  It  is  through  this  agency  that  the  city  has 
attained  the  proud  and  significant  title  of  "City  of 
Homes."  Over  100,000  workingmen  in  this  one  city  have 
secured  homes  through  these  associations.  This  is  merely 
given  as  an  illustration  on  a  large  basis.  There  is  con- 
vincing proof  that  in  other  large  cities  of  the  country,  such 
as  Chicago,  Baltimore,  Cincinnati,  St.  Louis,  Rochester, 
Troy,  Utica  and  Newark,  similar  conditions  in  the  same 
proportion  prevail.  In  the  smaller  cities  and  villages  even 
a  greater  percentage  of  home  ownership  has  been  accom- 

[17] 


CHAPTER  III. 

plished.  In  most  of  the  places  where  they  have  been 
estabUshed  they  continue  to  prosper,  and  while  there  have 
not  been  as  many  new  organizations  formed  in  the  last 
decade,  the  capital  and  property  under  their  control  have 
grown  enormously. 

MEANS  TO   FINANCIAL  ADVANCEMENT. 

Building,  loan  and  savings  associations  are  now  an 
important  factor  in  the  social  economy  of  the  country. 
Their  establishment  is  encouraged  by  political  economists 
and  philanthropists,  and  they  are  carefully  guarded  and 
fostered  by  legislation.  The  large  middle  class  of  our 
population,  among  whom  they  principally  flourish,  recog- 
nize them  as  a  means  to  financial  advancement.  Their 
beneficent  and  economic  value  to  a  community  is  now 
acknowledged  by  all  classes  and  hence  they  are  encouraged 
on  every  hand  as  a  potent  factor  in  promoting  the  public 
welfare.  The  chief  advantages  of  these  institutions  may 
be  stated  as  follows : 

1.  Each  member  has  a  voice  in  its  creation  and  manage- 
ment, and  all  share  equitably  in  its  advantages  and  profits. 

2.  It  furnishes  the  best  method  by  which  wage  earners 
and  others  with  limited  incomes  can  become  their  own 
capitalists. 

3.  The  association  furnishes  a  better  and  safer  oppor- 
tunity than  any  other  plan  that  has  yet  been  devised  for 
securing  a  liberal  return  of  profits  from  small  and  period- 
ical savings. 

4.  The  industrial  classes,  the  storekeepers  and  manu- 

[18] 


HISTORICAL  REVIEW. 

facturers,  are  instructed  in  the  management  of  money  and 
property. 

5.  The  important  feature  of  these  associations  lies  in 
the  fact  that  they  enable  their  members  to  secure  the  benefit 
of  their  earnings  in  advance,  by  loaning  to  the  members 
funds  with  which  to  build  homes  or  to  embark  in  other 
enterprises.  These  loans  they  are  privileged  to  repay  in 
such  regular  weekly  or  monthly  installments  as  their  earn- 
ings will  permit.  In  many  cases  they  are  enabled  to  make 
straight  loans. 

6.  The  line  of  credit  that  is  extended  to  the  wage  earner, 
small  merchant  or  manufacturer,  is  an  important  factor 
in  the  development  of  this  country. 

With  the  spread  of  intelligence  under  our  modern  civili- 
zation there  has  been  an  ever-increasing  effort  on  the  part 
of  the  working  classes  and  those  dependent  on  small 
incomes  to  accumulate  money.  In  order  to  become  in  any 
measure  independent,  people  depending  upon  their  own 
earnings  for  incomes,  must  constantly  practice  industry 
and  frugality  with  intelligent  judgment  and  patient 
perseverance.  Of  the  many  schemes  and  systems  that  have 
been  devised  to  aid  workingmen  or  women  in  this  respect, 
none  has  proved  so  popular  or  successful  as  building,  loan 
and  savings  associations.  A  strong  point  in  their  favor  is 
their  purely  democratic  character  and  the  mutual  nature 
of  their  advantages.  In  other  systems  of  savings,  the 
management  of  the  enterprise  is  vested  in  a  few  individuals 
and  the  depositors  have  little  more  to  do  with  it  than  the 
mere  mechanical  act  of  making  their  deposits.  In  the 
building,  loan  and  savings  associations  the  conditions  are 

[19] 


CHAPTER  III. 

entirely  different,  for  here  the  depositor  has  an  active 
interest  in  the  enterprise.  He  has  a  voice  and  influence  in 
of  those  associations,  where  special  deposits  are  received 
of  those  associations  where  special  deposits  are  received 
under  certain  conditions,  there  is  no  preferred  class  to  be 
benefited  at  the  expense  of  the  other  members.  Even 
though  a  capitalist  becomes  a  member  and  subscribes  for  a 
large  number  of  shares  he  can  derive  no  benefit  or 
advantage  on  each  share  that  cannot  be  commanded  by  the 
humblest  member.  He  must  enter  upon  the  same  terms 
exactly  that  are  required  of  other  members  and  must  stand 
upon  an  equal  footing  with  them  throughout.  Stock- 
holders elect  their  own  directors,  choosing  from  their  own 
number  such  persons  as  they  wish  to  clothe  with  authority 
to  administer  the  affairs  of  the  association.  By  using 
discretion  in  selecting  intelligent  and  honest  managers, 
and  then  holding  them  to  strict  accountability  for  their 
policy  and  management,  they  insure  an  economical  and 
faithful  administration  of  the  business  of  the  association, 
in  the  benefits  of  which  all  the  members  participate. 

Associations  open  to  a  member  an  opportunity  to  share 
in  the  profits  on  small  savings  which  cannot  be  secured 
in  any  other  direction.  The  deposits  of  all  the  members 
when  combined  form  a  sum  of  money  of  such  proportions 
as  command  opportunities  and  advantages  in  the  way  of 
investment  impossible  for  the  members  acting  independ- 
ently to  secure  through  their  individual  savings.  Under 
this  system  members  become  their  own  self-made  cap- 
italists. The  collective  savings  of  the  people  who  do  not 
need  their  money  form  a  sum  out  of  which  other  people 

[20] 


HISTORICAL  REVIEW. 

who  do  need  the  money  may  supply  their  wants,  and  on 
such  conditions  that  both  borrowers  and  lenders  reap 
mutual  benefit  from  the  transaction.  They  are  independent 
of  private  capitalists  and  other  financial  institutions  and 
save  for  themselves  the  tribute  they  must  otherwise  pay 
to  some  money  lender,  should  they  desire  to  build 
at  home,  to  embark  in  business,  or  to  make  any  other 
use  of  the  money.  Moreover,  as  is  seen,  the  association 
itself  creates  the  opportunity  for  the  profitable  use  of  capital. 
The  wage  earner,  trained  to  habits  of  economy  and  thrift 
by  the  influence  of  the  association,  and  roused  to  a  laud- 
able ambition  by  the  opportunities  it  suggests  and  offers, 
becomes  himself  a  borrower  and  investor  of  capital  and 
supplies  his  needs  for  money  from  the  accumulated  capital 
of  his  associates. 

The  methods  by  which  these  associations  are  operated 
insures  the  minimum  expense  in  handling  their  funds. 
At  the  same  time  the  opportunities  and  sources  of  profit 
are  larger  and  cannot  be  secured  to  the  same  extent  except 
through  a  co-operative  effort  of  this  nature.  Not  only  is 
a  fair  rate  of  interest  to  be  expected  from  an  investment  in 
the  shares  of  a  well  conducted  association,  but  through 
the  system  adopted  by  nearly  all  of  these  societies,  the  mem- 
bers receive  a  greater  income  yield  than  in  any  financial 
institution  of  like  nature.  In  the  matter  of  fines  and  for- 
feitures enforced  against  delinquent  members,  which 
formerly  constituted  a  large  source  of  profit  for  these 
associations,  this  idea  is  fast  disappearing.  The  same  may 
be  said  of  the  premiums  on  loans.  The  undeclared  div- 
idends on  withdrawals  form  one  of  the  sources  of  profit. 

[21] 


CHAPTER  III. 

Thus  it  will  be  seen  that  this  institution  furnishes  unusual 
opportunities  for  securing  profits  upon  small  savings, 
opportunities  which  capitalists  themselves  cannot  secure 
except  upon  exactly  the  same  terms  and  conditions. 

Ordinarily,  the  man  earning  wages,  and  especially  one 
having  a  considerable  family  dependent  upon  him,  finds 
great  difficulty  in  meeting  the  demands  that  are  constantly 
being  made  upon  his  purse.  Too  often,  discouraged  by 
circumstances,  he  falls  into  a  mere  routine  way  and  feels 
satisfied  if  from  week  to  week  his  net  income  meets  his 
expenses.  Occasionally,  however,  a  man  of  this  class, 
more  ambitious  than  his  fellows,  sets  about  to  form  some 
plan  of  his  own  for  regular  saving  and  thereby  gradually 
accumulates  a  sum  of  money.  Whether  this  be  done  by 
hoarding  it  in  some  secret  receptacle,  or  by  depositing  it  in 
some  bank  or  savings  institution,  the  act  is  only  a  routine 
and  mechanical  one,  and  he  gains  thereby  nothing  more 
than  a  mere  addition  to  his  savings.  It  is  only  after  hav- 
ing his  savings  placed  in  an  institution  for  a  period,  usually 
not  less  than  six  months,  that  he  receives  a  fixed  rate  of 
interest  thereon.  In  saving  by  this  plan  a  working  man 
does  not  secure  the  interest  or  profit  upon  his  savings  that 
he  should  receive.  He  has  no  occasion  for  the  exercise 
of  his  judgment,  and  gains  no  experience  that  would  be 
an  advantage  to  him  in  the  management  of  a  sum  of 
money  if  he  had  it.  Living  thus  from  day  to  day  in 
ignorance  of  the  various  means  of  accumulation  and 
investment  he  is  not  likely  to  make  much  advance  in  this 
direction.  Should  he  succeed  through  constant  hoarding 
in  accumulating  a  sum  of  money  of  his  own,  when  he 

[22] 


HISTORICAL  REVIEW. 

undertakes  to  make  an  investment  he  must  either  run  the 
risk  of  losing  all  or  a  part  of  his  savings  through  his 
ignorance  and  inexperience,  or  he  must  become  dependent 
upon  the  skill  and  knowledge  of  others  in  the  management 
of  property. 

It  is  not  necessary  to  dwell  upon  the  advantages  gained 
by  those  who  are  able  to  secure  homes  of  their  own.  These 
advantages  are  seen  in  the  increased  happiness  and  con- 
tentment of  families,  their  greater  comfort  and  better 
health,  increased  educational  advantages  and  opportu- 
nities, more  economy  in  the  expenses  of  living,  greater 
interest  in  the  civic  welfare  of  their  respective  com- 
munities, and  that  independence  of  action  and  bearing 
which  can  arise  only  from  the  intelligent  and  regular  dis- 
charge of  the  responsibilities  and  duties  incident  to  this 
natural  and  beneficial  form  of  home  life. 

THE  FUTURE  OF  THE  MOVEMENT. 

The  associations  have  increased  in  membership  in  those 
states  where  they  have  had  successful  administration  of 
their  affairs.  Wherever  they  exist,  as  a  rule,  a  large  pro- 
portion of  the  population  is  identified  with  them,  both  as 
stockholders  and  borrowers.  The  benefits  of  such  organ- 
izations are  so  apparent  and  their  popularity  so  well 
established  that  it  is  evident  they  are  but  beginning  to 
occupy  their  fields  of  usefulness.  In  view  of  the  steady 
and  rapidly  increasing  development  of  the  country  it 
seems  entirely  safe  to  predict  that  while  the  number  of 
associations  will  not  increase  with  such  rapidity  as  they 
have  in  the  past,  those  that  are  now  established,  having 

[23] 


CHAPTER  III. 

secured  the  confidence  of  the  public,  will  continue  to 
increase  their  membership.  The  growth  of  monopolies 
and  the  tendency  of  money  toward  centralization,  the 
organization  of  syndicates  and  trusts,  which  often  create 
false  values  of  many  of  the  necessities  and  luxuries  of  life, 
will  inevitably  more  and  more  draw  the  masses  of  the 
people  into  organizations  for  purposes  of  self-defense  and 
financial  security  and  advancement. 


[24] 


CHAPTER  IV. 


Building  Association  Leagues. 


PURPOSES  OF  LEAGUES. 

The  necessity  for  greater  uniformity  of  methods,  the 
constant  vigilance  required  to  prevent  inimical  legislation 
and  the  concerted  action  necessary  to  secure  progressive 
enactments  favorable  to  the  development  of  these  associa- 
tions, led  to  the  formation  of  so-called  leagues,  which 
enable  an  interchange  of  views,  foster  a  spirit  of  mutuality 
and  make  for  harmonious  and  concurrent  action. 

In  England,  where  building  societies  have  long  been  in 
existence,  co-operation  among  these  associations  has  been 
established  by  the  so-called  Congress  of  Building 
Societies.  These  meetings  are  held  annually  at  designated 
places,  to  which  delegates  from  the  respective  localities  are 
selected  to  represent  these  interests.  The  proceedings 
issued  by  this  organization  have  formed  a  very  important 
historical  review  of  the  movement  in  Great  Britain. 

THE  UNITED  STATES  LEAGUE. 

In  the  United  States,  in  1892,  at  a  state  convention  of 
the  Ohio  Building  Association  League,  held  at  Toledo, 
Ohio,  a  resolution  was  introduced  for  the  appointment  of 
delegates   to   a   provisional   convention    of   the  various 

[25] 


CHAPTER  IV. 

leagues  then  in  existence  in  the  United  States.  Thereupon 
a  committee  was  appointed  to  take  up  the  matter  with  other 
state  leagues,  to  hold  a  preliminary  meeting  at  Chicago, 
so  that  proper  steps  could  be  taken  to  organize  the  United 
States  League  of  Local  Building  and  Loan  Associations. 
In  this  connection  it  was  also  deemed  advisable  to  have  the 
work  of  the  associations  brought  properly  before  the 
people  of  the  United  States  and  other  countries  by  the 
holding  of  a  symposium  at  the  World's  Fair  Congress  at 
Chicago  in  1893.  The  preliminary  meeting  was  held  at 
the  Grand  Pacific  Hotel,  Chicago,  in  April  of  the  fol- 
lowing year.  Temporary  officers  were  elected,  who  were 
authorized  to  make  an  official  call  on  the  state  leagues 
then  in  existence  to  become  affiliated  with  this  organiza- 
tion. The  first  meeting  was  held  in  Chicago,  July, 
1893.  Since  that  time  the  league  has  held  regular 
meetings  in  various  cities  of  the  United  States.  The  great 
value  of  the  work  that  has  been  accomplished  by  this  use- 
ful organization  is  now  recognized.  In  fact,  the  statistical 
information  gathered  together  with  a  review  of  the  work 
accomplished  during  each  year  is  properly  brought  before 
the  American  public  through  this  agency. 

THE  ORGANIZATION  OF  STATE  LEAGUES. 

The  matter  of  forming  state  leagues  for  the  protection 
of  the  Building,  Loan  and  Savings  Associations  from 
inimical  legislation,  and  for  the  betterment  of  their 
methods  of  doing  business,  has  led  to  the  organization  of 
the  various  state  leagues.  In  all  states  where  these  interests 
are  important,  such  associations  have  been  successfully 

[26] 


BUILDING  ASSOCIATION  LEAGUES. 

organized.  These  leagues  hold  annual  conventions,  to 
which  all  associations  are  invited  to  send  delegates.  It  has 
been  the  custom  to  select  one  or  two  representatives  from 
each  association  as  delegates  to  attend  these  annual  gather- 
ings. A  program  is  arranged  with  papers  and  discus- 
sions which  are  carefully  prepared  and  from  which  the 
movement  has  derived  untold  benefits.  It  is  highly 
important  that  all  associations  in  each  state  should  be 
affiliated  with  their  respective  leagues.  The  many  impor- 
tant matters  that  affect  their  interests  in  legislative,  judi- 
cial and  commercial  ways  demand  their  hearty  co-opera- 
tion at  all  times.  It  is  also  the  best  channel  through  which 
the  associations  can  acquaint  themselves  with  modern 
ideas  and  the  advanced  thought  of  the  movement. 

INTERNATIONAL  LEAGUE. 

The  organization  of  an  international  league  that  will 
represent  the  leading  nations  of  the  world  is  likely  to 
become  an  accomplished  fact  in  the  near  future.  These 
conferences,  with  representations  from  the  various  nations 
of  the  earth,  would  do  much  to  advance  the  general 
interests  along  these  lines. 

COUNTY,   CITY  AND  LOCAL  LEAGUES. 

In  many  places  where  there  are  a  number  of  associations 
in  existence,  it  has  also  been  the  custom  to  form  local 
leagues.  These  organizations  meet  at  regular  intervals 
and  discuss  problems  for  the  welfare  of  these  associations. 
In  some  cities,  scheming  building  operators  have  sought 
to  use  building  associations  as  a  means  to  advance  their 
personal  interest,  but  with  co-operation  among  the  asso- 

[27] 


CHAPTER  IV. 

ciations  in  these  localities  this  abuse  has  been  promptly 
stopped.  There  are  many  advantages  to  be  derived  from 
these  organizations.  It  has  the  tendency  to  bring  the 
interests  closer  together.  The  strongest  organization  of 
this  character  is  the  Hamilton  County  (Ohio)  Building 
and  Loan  Association  League,  with  headquarters  at  Cin- 
cinnati. This  league  has  a  splendid  working  organization, 
has  duly  appointed  legislative,  finance,  executive  and 
exchange  committees  which  are  selected  from  a  board  of 
trustees  elected  annually  for  this  purpose.  The  hearty  co- 
operation of  the  local  league,  given  not  only  to  the  state 
but  also  to  the  United  States  League,  has  proven  an 
important  factor  in  legislative  as  well  as  other  matters, 
and  it  is  proper  to  state  that  most  of  the  important  legisla- 
tion to  which  reference  has  been  made  had  its  inception 
with  this  particular  league,  and  much  of  its  success  is  due 
to  its  prompt  action. 

WHAT  A  LEAGUE  CAN  DO. 

The  work  of  a  league  will  divide  itself  into  two 
branches : 

1.  The  primary  purpose  in  the  organization  of  a  league 
will  be  to  secure  favorable  legislation  and  prevent  leg- 
islation inimical  to  the  interests  of  associations.  In  pursu- 
ance of  this  purpose  at  the  meetings  of  the  league  matters 
for  consideration  can  be  sent  up  from  associations  in  all 
parts  of  the  state  and  working  under  divers  circumstances. 
The  league  delegates,  representing  the  whole  building 
association  interests  of  the  state,  can  consider  these  mat- 
ters specifically  and  arrange  to  have  them  formulated  in 

[28] 


BUILDING  ASSOCIATION  LEAGUES. 

the  most  desirable  way.  A  league  being  established,  it  is 
possible  to  send  a  delegation  representative  of  building 
association  interests  before  the  legislature  on  short  notice 
at  any  time,  whereas,  in  the  absence  of  such  a  league,  mat- 
ters of  grave  importance  must  go  by  default,  and  associa- 
tion interests  suffer  in  consequence,  because  it  is  the  busi- 
ness of  no  particular  person  to  represent  them  before  the 
legislature. 

2.  A  second  matter  of  great  importance  to  associations 
is  the  opportunity  which  the  existence  of  a  league  affords 
for  the  discussion  of  all  questions  connected  with  the  prac- 
tical management  of  associations.  As  is  well  known  there 
is  not  uniformity  of  method  in  disposing  of  various  mat- 
ters in  different  associations.  In  some  associations  one 
phase  of  the  business  may  be  handled  by  a  better  method 
than  in  another.  Delegates,  coming  together  for  the 
discussion  of  these  practical  questions,  may  learn  much 
from  one  another  which  will  be  greatly  to  the  advantage 
of  their  respective  associations. 

There  are  many  other  incidental  advantages  which  may 
arise  from  the  establishment  and  the  regular  meetings  of 
such  a  league  which  will  readily  suggest  themselves  to 
any  thoughtful  person.  Such  Congresses  have  become 
a  striking  feature  of  co-operative  work  in  England. 

LEAGUE  MEMBERSHIP. 

Of  course  the  work  of  a  league  cannot  be  carried  on 
without  some  expense.  Nevertheless,  if  a  league  is  prop- 
erly organized  and  managed,  the  expenses  need  not  be 
heavy.     To  meet  these  expenses  each  association  which 

[29] 


CHAPTER  IV. 

becomes  a  member  of  the  league  should  pay  a  small  fee. 
In  case  additional  funds  are  necessary  it  is  easy  to  increase 
the  annual  dues  or  to  make  some  other  provision  for  rais- 
ing them. 

It  is  very  important  that  every  association  should 
become  a  member  of  its  state  league.  A  state  league  is 
charged  with  protecting  the  interests  of  all  the  associa- 
tions in  the  state.  In  order  that  this  work  may  be  done 
intelligently  all  the  associations  should  be  represented  in 
the  league  in  order  that  their  respective  needs  may  be 
properly  presented  and  fully  understood.  The  league, 
like  an  association  itself,  is  a  mutual  and  co-opera- 
tive institution.  Associations,  therefore,  should  identify 
themselves  with  it  so  as  to  make  it  co-operative  in  fact  as 
well  as  in  name.  Again,  since  the  league  protects  the 
interests  of  every  association  in  the  state,  each  association 
should  bear  its  proper  share  of  the  expenses  and  labor 
connected  with  the  work  of  the  league.  It  is  not  fair 
where  there  are,  say,  three  hundred  or  four  hundred  asso- 
ciations in  a  state,  for  twenty  or  thirty  of  them  to  bear 
the  full  expense  and  labor  of  looking  after  legislation, 
perfecting  methods,  and  so  on. 

It  ought  to  be  borne  in  mind  also  that  while  a  league  is 
an  organized  body  its  work  must  be  done  by  individuals. 
While  the  expenses  of  delegates  to  the  league  meetings 
are  usually  borne  by  the  associations  they  represent,  yet 
these  individual  delegates  must  lose  their  time  from  their 
own  private  business,  and  incidentally  are  put  to  no  little 
inconvenience  and  ofttimes  expense.  Their  work  if  well 
done  is  laborious  and  painstaking.     This  applies  and  is 

[30] 


BUILDING  ASSOCIATION  LEAGUES. 

especially  true  of  the  officers  of  leagues.  Under  these  cir- 
cumstances they  should  certainly  have  the  cordial  and 
unanimous  support  of  the  whole  interest  which  they  rep- 
resent, and  thus,  in  a  measure,  lightening  their  burdens, 
giving  them  such  a  standing  and  prestige  that  will  make 
them  far  more  influential  in  securing  the  ends  for  which 
they  labor. 

RESUME. 

The  greatest  benefit  accruing  from  the  various  meetings 
of  the  leagues,  is  the  publicity  of  the  work  of  these  institu- 
tions. Wherever  these  meetings  are  held  the  daily  press 
has  given  widespread  prominence  to  their  work.  Many  of 
the  papers  that  are  delivered  are  published  in  full,  and  the 
general  public  is  becoming  better  informed  through  this 
avenue,  so  that  aside  from  the  great  benefits  that  have 
been  derived  from  legislative,  judicial  and  other  work,  the 
publicity  of  the  work  has  doubtless  been  the  strongest 
factor  for  development. 


[31] 


CHAPTER  V. 


Legislation  and  Taxation. 


ITS  NECESSITY. 

The  necessity  for  judicious  legislation  for  the  control 
of  building,  loan  and  savings  associations  is  apparent. 
Immense  interests  to  citizens  and  the  state  are  involved. 
If  the  associations  are  of  value  at  all,  they  are  closely 
identified  with  the  material  and  moral  welfare  of  com- 
munities. It  is  of  the  highest  importance  therefore  that 
their  corporate  rights  and  duties  should  be  clearly  defined 
by  statute,  and  that  the  individual  rights  of  members 
should  be  carefully  guarded,  and  their  duties  and  priv- 
ileges specifically  defined. 

The  many  different  people  who  are  chosen  to  legislative 
bodies,  representing  so  many  different  sections  and  varied 
interests,  with  many  ideas  and  diverse  views,  and  not  a 
few  of  them  with  no  knowledge  of  or  experience  in  build- 
ing association  affairs,  establish  conditions  out  of  which 
have  sprung  up  legislation,  some  of  which  has  been  benefi- 
cial and  others  again  detrimental. 

Many  conservative  and  useful  laws  have  been  enacted, 
which  have  materially  promoted  their  interests.  On  the 
other  hand  there  has  been  no  little  patch-work  and  super- 
ficial legislation  which  sometimes  has  proved  detrimental 

[32] 


LEGISLATION  AND  TAXATION. 

to  the  cause  it  was  intended  to  benefit.  Owing  to  the 
popularity  of  these  associations  many  of  our  statesmen,  a 
little  too  ambitious  to  legislate,  have  enacted  some  imprac- 
ticable and  unwise  measures.  Fortunately,  through 
experience,  the  time  has  arrived  when  the  persons  elected 
to  the  various  legislatures  and  to  congress,  are  becoming 
better  informed  as  to  the  real  nature  and  functions  of  these 
associations.  The  establishment  of  the  United  States, 
state  and  local  leagues  has  made  it  possible  to  reach  the 
lawmakers  in  a  formal,  representative,  and  influential 
manner.  Legislators  are  growing  wiser.  If  an  improper 
measure  is  now  introduced  into  any  legislature,  there 
are  faithful  and  intelligent  guardians  of  the  associations, 
either  within  the  legislature  or  without,  who  will  quickly 
turn  the  light  on  and  expose  it. 

LEGISLATION  IN  ENGLAND. 

The  success  of  the  Greenwich  Union  Building  Society 
and  of  other  early  organizations  of  the  kind  in  England, 
soon  attracted  the  attention  of  the  government.  So. 
important  was  the  movement  considered,  as  indicated  by 
the  activity  of  these  organizations,  that  in  the  year  1836 
an  Act  of  Parliament  was  passed  giving  building  associa- 
tions their  first  legal  recognition,  providing  ample 
opportunities  and  inducements  for  their  formation,  and 
making  full  provision  for  the  protection  of  their  members. 
English  societies  existed  under  this  act  until  1874,  when  a 
new  act,  very  liberal  and  elaborate  in  its  provisions,  was 
passed. 


[33] 


CHAPTER  V. 

PROVISIONS  OF  THE  ENGLISH  LAW. 

The  English  law  seems  to  have  been  the  basis  upon 
which  most  of  the  legislation  in  this  country,  relating  to 
building  associations,  is  founded.  A  brief  synopsis  of  its 
provisions  will  therefore  be  of  interest.  It  declares  that 
any  number  of  persons  may  establish  a  society,  either 
terminating  or  permanent,  for  the  purpose  of  raising,  by 
the  subscriptions  of  the  members  in  stock  or  funds,  means 
for  making  advances  to  members  out  of  the  funds  of  the 
society  upon  security  on  freehold,  copyhold,  or  leasehold 
estate  by  way  of  mortgage ;  and  any  society  under  the  act 
shall,  as  far  as  it  is  necessary  for  the  said  purpose,  have 
power  to  hold  land,  with  right  of  foreclosure,  and  may 
from  time  to  time  raise  funds  by  the  issue  of  shares  of  one 
or  more  denominations,  paid  either  by  periodical  or  other 
subscriptions,  and  with  or  without  accumulating  interest, 
and  may  repay  such  funds,  when  no  longer  required  for 
the  purpose  of  the  society.  Societies  are  empowered  to 
receive  deposits  or  loans  from  members  or  other  persons, 
corporate  bodies,  joint-stock  companies,  or  terminating 
building  societies.  Societies  established  under  or  adopting 
the  act  of  1874  are  bodies  corporate,  having  perpetual  suc- 
cession and  a  common  seal,  thus  dispensing  with  the  cum- 
brous and  inconvenient  system  of  trusteeship.  The  rules 
must  specify  the  society's  name  and  place  of  meeting, 
terms  of  withdrawal  and  repayment,  manner  of  alteration 
of  rules,  the  appointment,  remuneration,  and  removal  of 
officers,  provisions  as  to  general  and  special  meetings,  and 
the  settlement  of  disputes,  custody  of  seal,  mortgage  deeds 

[34] 


LEGISLATION  AND  TAXATION. 

and  securities,  powers  of  directors  and  other  officers,  fines, 
and  modes  of  dissolution.  Societies  may  unite  with 
others.  One  society  may  transfer  its  engagements  to 
another.  They  may  purchase,  build,  or  hire,  or  take  on 
lease,  any  building  for  conducting  their  business.  Minors 
may  be  members,  but  cannot  vote  or  hold  office  during 
non-age.  Accounts  are  to  be  furnished  to  members 
annually.  The  societies  are  exempt  from  stamp  duties, 
except  those  upon  mortgages.  Receipts  indorsed  upon 
mortgages  are  sufficient  discharges  without  conveyance. 
The  law  of  1836  provided  for  the  appointment  of  a 
special  board  of  commissioners  to  superintend  the  work  of 
the  Loan  Fund  Societies  of  Ireland.  This  was  called  the 
Loan  Fund  Board.  All  societies  had  to  register  with  and 
report  to  this  board,  whose  duty  it  was  to  see  that  the 
societies  conducted  their  affairs  according  to  the  provi- 
sions of  the  new  law. 

DEFECTS  IN  THE  ENGLISH  LAW. 

Upon  analysis  it  will  be  found  that  the  English  acts 
governing  building  societies  are  not  philosophical  and 
harmonious  in  their  construction.  They  were  rather 
spontaneous  and  sporadic  in  their  origin,  springing  up 
from  time  to  time  out  of  necessity,  or  to  meet  some  special 
interest.  It  would  not  be  in  place  here  to  attempt  an  anal- 
ysis of  the  English  statutes,  and  to  point  out  their  con- 
tradictory and  inharmonious  provisions.  It  will  be  suf- 
ficient to  quote  a  passage  from  the  masterly  work*  of  an 


•  The  Law  of  Building  and  Free  Hold  Land  Societies,  3d  edition,  H.  Sweet 
&  Sons,  London,  England. 

[35] 


CHAPTER  V. 

English  writer,  Mr.  Henry  F.  A.  Davis.  He  says :  "This 
(act)  has  been  unfavorably  noticed  by  some  learned  judge 
who  has  had  to  decide  a  question  arising  under  it.  A  piece 
of  legislation  more  resembling  patch-work  it  would  be  dif- 
ficult to  find  anywhere.  Two  acts  of  parliament,  originally 
intended  to  regulate  associations  having  very  different 
objects  in  view  from  those  contemplated  by  building 
societies — and  having,  as  a  writer  in  the  Jurist  once 
observed,  internal  evidence  of  their  having  been  passed 
during  the  chaos  of  a  legislative  convulsion — ^badly 
conceived  and  badly  executed,  were  by  a  third  act,  if  pos- 
sible more  clumsy  than  either,  incorporated  so  as  to  form 
the  code  which  was  to  govern  building  societies." 

LAWS  IN  THE  UNITED  STATES. 

The  history  of  associations  in  the  United  States  is  yet 
recent.  The  associations,  which  appeared  slowly  at  first, 
and,  later,  more  rapidly,  were  organized,  partly  as  unin- 
corporated, voluntary  associations,  and  partly  under  char- 
ters obtained  under  the  general  acts  of  several  of  the  states 
authorizing  the  incorporation  of  beneficial  and  other  such 
associations.  The  rapid  development  of  the  country  led  to 
a  like  rapid  development  of  building  associations,  so  that 
legislation  soon  became  imperative.  During  the  years 
from  1850  to  1860  most  of  the  older  states  endeavored  by 
legislation  to  regulate  the  formation,  powers,  and  manage- 
ment of  building  associations.  Since  1860  the  newer 
states  have  taken  up  the  subject.  At  the  present  time,  in 
nearly  all  the  states  and  territories,  there  is  some  statutory 
provision  for  the  government  of  associations. 

[36] 


LEGISLATION  AND  TAXATION. 

Building  associations  are,  as  a  rule,  recognized  by  the 
different  states  as  a  class  of  corporations  distinguished 
from  every  other,  peculiarly  alike  in  their  privileges  and 
disabilities.  Some  of  the  early  legislation  connected  there- 
with may  be  classed  as  hasty,  having  been  adopted  by  leg- 
islators ignorant  and  inexperienced  in  the  subject,  and 
with  no  commensurate  precedents  for  their  guidance.  But 
of  late  years  the  subject  has  received  more  intelligent 
attention,  and  many  legislators  have  given  much  study  to 
the  various  problems  connected  with  it. 

The  various  leagues  have  during  the  past  two  decades 
taken  an  aggressive  stand  in  the  matter  of  securing  proper 
legislation.  As  a  result,  committees  on  legislation  have 
been  appointed,  who  have  drafted  laws  on  this  subject. 
For  instance,  in  the  1890  convention  of  the  Ohio  Build- 
ing Association  League  a  motion  was  unanimously  car- 
ried instructing  the  legislative  committee  to  prepare  a 
code  of  laws  relating  to  building  and  loan  associations. 
After  this  committee  had  carefully  prepared  such  a  meas- 
ure it  was  submitted  in  printed  form  to  the  associations 
of  Ohio  for  suggestions  and  approval,  which  were 
properly  discussed  by  the  committee  and  finally,  after 
many  modifications  to  meet  the  views  of  those  interested, 
the  code  was  submitted  to  the  legislature  for  adoption. 
As  a  result  the  combined  interests  of  the  entire  state 
asked  the  legislature  for  the  proper  laws  relating  to  the 
subject,  so  that  in  May  1891  the  so-called  "Corcoran  Act" 
was  duly  presented  and  passed.  The  result  of  this  work 
was  so  satisfactory  to  the  building  associations  of  the 
state  that  under  these  beneficent  laws  the  assets  of  the 

[37] 


CHAPTER  V. 

associations  in  this  state  more  than  trebled  in  19  years. 
During  a  period  of  17  years  there  were  no  amendments 
made  to  this  law,  and  the  legislative  committee  of  the 
Ohio  Building  Association  League  assumed  the  defensive 
against  any  new  measures  that  were  introduced,  and  suc- 
cessfully defeated  all  attempts  to  alter  the  laws.  It  was 
only  after  a  long  period  of  time  that  at  the  Youngstown, 
Ohio,  meeting  in  1908,  a  resolution  was  passed  instructing 
the  legislative  committee  to  introduce  a  new  measure  to 
meet  the  modern  methods  demanded  by  the  people,  so  that 
in  1909  an  amended  measure  was  brought  before  the 
Ohio  legislature  along  the  same  lines,  and  known  as  the 
"Russell  Act,"  which  was  passed  and  became  a  law  in  that 
year. 

A  number  of  other  states  followed  the  work  of  the 
Ohio  League  in  this  important  matter,  and  these  interests 
now  have  very  favorable  laws  on  the  statute  books  of  the 
various  states  and  territories. 

LITIGATION. 

Not  only  has  the  legislation  under  which  associations 
have  operated  been  imperfect,  but  the  associations  them- 
selves have  unfortunately  been  organized  by  persons  both 
inexperienced  and  uninformed  in  such  matters.  It  has 
happened,  therefore,  that  through  crude  legislation  on 
the  one  hand,  and  crude  organization  on  the  other,  many 
associations  have  failed  to  a  greater  or  less  extent  in 
their  purpose,  and  that  in  most  of  the  states  litigation  has 
arisen  in  consequence.     With  the  enactment  of  proper 

[38] 


LEGISLATION  AND  TAXATION. 

legislation  there  has  been  a  wonderful  improvement  along 
these  lines. 

It  would  be  foreign  to  the  character  and  purpose  ol 
this  work  to  undertake  to  give  digests  of  the  laws  of  the 
different  states  and  territories  in  reference  to  associations, 
or  to  give  an  account  of  the  cases  arising  under  these  laws 
and  such  of  the  decisions  that  have  been  rendered  in  the 
different  courts.  Such  matters  belong  to  a  work  of  a 
legal  rather  than  to  a  popular  character.  Members  of 
associations  should  look  to  their  regular  legal  advisers 
for  information  and  instruction  upon  all  mooted  or  doubt- 
ful questions  of  a  legal  character. 

EXEMPTION    FROM  TAXATION. 

The  question  of  legislation  has  received  the  attention 
of  all  those  who  have  the  welfare  of  the  movement  at 
heart.  During  1891,  when  the  matter  of  a  federal  income 
tax  was  up  for  consideration  before  congress,  the  asso- 
ciations received  proper  recognition  in  the  shape  of  an 
exemption  from  said  tax  which  read  as  follows : 

"Nothing  herein  conitained  shall  apply  to  building  and  loan  associa- 
tions or  companies  which  make  loans  only  to  their  shareholders." 

During  1898,  the  time  of  the  Spanish-American  War, 
when  the  Stamp  Act  was  passed  by  Congress,  the  associa- 
tions were  properly  exempted  from  this  tax,  the  exemp- 
tion clause  reading  as  follows : 

"Provided,  further.  That  stocks  and  bonds  issued  by  co-operative 
building  and  loan  associations,  whose  capital  stock  does  not  exceed 
$10,000,  and  building  and  loan  associations,  or  companies,  which 
make  loans  only  to  their  shareholders,  shall  be  exempt  from  the  tax 
herein  provided." 

[39] 


CHAPTER  V. 

In  1909  the  tax  on  corporations  was  passed  by  Congress 
and  after  strenuous  efforts  the  building,  loan  and  savings 
associations  were  exempted  from  this  tax,  the  exemption 
reading  as  follows : 

"  *  *  *  *  Nor  to  domestic  building  and  loan  associations  organized 
and  operated  exclusively  for  the  mutual  benefit  of  their  members." 

Thus  it  will  be  seen  that  during  the  past  two  decades 
the  Congress  of  the  United  States  has  consistently  granted 
this  movement  exemptions,  due  to  the  fact  that  their 
beneficent  work  along  the  lines  of  home  building  and  co- 
operative savings  were  properly  entitled  to  this  recog- 
nition. 

In  nearly  all  of  the  states  we  find  special  legislation 
granting  associations  special  privileges  and  exemptions 
from  taxation  on  charters  and  other  items  which  have  been 
of  the  greatest  importance.  However,  in  some  states, 
notably  Michigan  and  Kentucky,  the  tax  on  the  capital 
stock  of  new  incorporations  has  almost  prohibited  the 
organization  of  new  institutions,  and  those  that  are  in 
existence,  when  in  need  of  additional  capital  stock,  find  it 
an  onerous  provision.  This  should  be  repealed  without 
delay. 

EXEMPTING  HOMESTEADS  FROM  TAXATION. 

Among  the  most  important  legislative  measures  that 
the  future  will  develop,  will  be  that  of  giving  home 
builders  exemption  from  taxation.  The  question  is  now 
being  agitated  that  constitutional  amendments  should  be 
submitted  to  the  people,  exempting  the  homesteads  in  the 
respective  states  from  taxation  to  the  amount  of  $3,000. 

[40] 


LEGISLATION  AND  TAXATION. 

Such  provision  should  be  made  to  assist  the  wage-earner 
to  procure  a  home.  The  matter  will  likely  be  agitated  by 
the  building,  loan  and  savings  association  officials  to  such 
an  extent  as  to  bring  about  popular  support  to  this  impor- 
tant measure. 

THE   ASSOCIATION    IN    REALITY   A    CLEARING   HOUSE    FOR    ITS 
MEMBERS. 

The  assets  of  a  building  association  are  made  up  of  the 
individual  holdings  of  its  members  and  belong  to  each  of 
them,  to  the  amount  which  they  have  contributed  to  a 
general  fund.  Therefore  the  association  in  reality  becomes 
a  clearing  house  for  its  membership,  and  has  no  assets 
on  which  it  can  realize,  such  as  other  financial  institutions 
have,  so  from  the  very  nature  of  its  co-operative  character 
it  has  nothing  that  should  be  taxed  outside  of  its  regular 
office  fixtures,  books,  etc.  As  these  have  but  little  com- 
mercial value,  there  is  no  valid  reason  that  can  be 
advanced  why  the  association  should  be  taxed  in  any  form. 

STATESMEN    WHO    HAVE    BEEN    OF    DIRECT    BENEFIT    TO    THE 
MOVEMENT. 

With  the  importance  and  growth  of  these  associations 
it  was  natural  that  legislation  would  follow  that  might 
prove  inimical  to  their  interests,  so  that  the  associations  at 
times  have  been  compelled  to  apply  to  men  in  public  life 
to  give  their  aid  to  benefit  the  work  of  co-operative  sav- 
ings and  home  building. 

Among  the  many  notable  men  who  have  aided  in  this 
work  may  be  mentioned  the  Hon.  John  Sherman,  Hon. 

[41] 


CHAPTER  V. 

J.  B.  Foraker  and  the  Hon.  Charles  Dick,  of  Ohio,  Ex- 
President  Roosevelt  at  the  time  he  was  governor  of  the 
state  of  New  York,  and  President  Wm.  H.  Taft,  in  addi- 
tion to  a  number  of  others.  To  these  gentlemen  the  build- 
ing association  interests  of  the  United  States  are  indebted 
for  their  valuable  services  rendered  at  times  when  legisla- 
tion was  pending  that  affected  these  interests.  Without 
their  support  it  is  doubtful  if  the  associations  could  have 
succeeded  in  securing  the  exemptions  that  have  been 
granted. 

TAXATION. 

In  a  paper  read  before  the  United  States  League,  Hon. 
Julius  Stern,  of  Chicago,  referring  to  the  necessity  for  and 
the  justification  of  the  exemption  of  local  building  and 
loan  associations  from  taxation,  states  the  following : 

"Nevertheless  exemption  laws  in  matters  of  taxation*  will  on 
examination  be  found  to  be  as  old  as  the  laws  imposing  taxes  them- 
selves, an-d  we  will  find  that  there  has  been  no  time  when  exemption 
from  the  imposition  of  fiscal  burdens  was  not  practiced  and  favored 
under  the  written  laws  and  possibly  the  unwritten  ones  which  preceded 
them.  An  inquiry  as  to  the  propriety  of  exemptions  in  general  must 
therefore  be  narrowed  down  to  an  inquiry  into  the  proper  selection 
of  the  matters  and  things  to  be  exempted  from  taxation,  and  as  to  the 
forms  of  property  the  exemption  of  which  from  taxation  will  be  most 
conducive  to  the  advancement,  and  conservation  of  the  government 
by  the  greater  progress  in  wealth,  stability,  and  sustaining  power  of 
the  people,  which  would  naturally  follow  from  such  exemptions. 

"It  has  been  the  practice  of  American  governments,  both  state  ana 
municipal,  to  embody  in  their  constitutions  and  statutes  laws  exempt- 
ing property  devoted  to  charitable  and  educational  uses  from  taxa- 
tion, on  the  theory  that  whatever  advanced  the  education  of  the  people 
conduced  to  their  greater  progress  and  wealth-producing  power,  and 
that  whatever  was  devoted  to  charitable  uses  should  escape  the  exac- 
tions of  the  tax  gatherer,  because  it  was  not  productive  of  income  to 

[42] 


LEGISLATION  AND  TAXATION. 

those  who  expended  the  money,  and  possibly  also  because  of  the 
moral  sentiment  before  alluded  to. 

"It  must  be  conceded,  however,  that  it  is  good  economics  as  well 
as  good  morals,  and  free  from  any  taint  of  dubious  experiment,  for 
any  government  to  foster  home-owning  and  thrift,  that  at  all  times 
and  in  all  places,  these  form  the  basis  for  a  better  mode  of  living 
and  ever  growing  expenditures  on  material  things  which  in  themselves 
are  taxed  by  the  government;  while  on  the  other  hand  among  the 
most  mischievous  forms  of  taxation  that  can  be  devised  are  such  as 
place  skill,  industry,  and  frugality  at  a  disadvantage  in  the  struggle 
for  existence.  Again,  the  policy  of  exempting  certain  industries  for 
limited  periods,  or  for  all  time,  in  order  to  foster  their  growth  as  a 
source  of  future  strength  to  the  government  by  way  of  providing  a 
fruitful  field  for  future  taxation,  indirect  or  direct,  has  been  prac- 
ticed both  by  the  national  and  state  governments ;  and  where  put  into 
execution  with  proper  forethought,  and  surrounded  with  necessary 
safeguards,  has  been  productive  of  satisfactory  results. 

"All  taxation  to  be  just  should  be  imposed  so  that  every  species  ot 
property  in  proportion  to  its  value  be  made  to  bear  its  due  and  equal 
share  of  the  burden;  yet,  if  it  be  perceived  that  by  minrimizing  its 
weight  in  certain  directions  for  a  time,  or  by  excluding  here  and  there 
the  burden  altogether,  an  economic  result  is  achieved  which  will 
yield  greatly  increased  returns  in  the  future  from  the  aggregate  of 
taxables,  then  it  is  the  part  of  wisdom  in  that  behalf  to  so  minimize 
or  exclude, — that  is,  exempt  from  taxation. 

"For  instance,  to  encourage  commercial  enterprises  and  exchanges 
governments  have  often  found  it  expedient  and  profitable  to  exempt 
from  taxation  the  shipping  necessary  to  carry  on  these  enterprises,  and 
not  only  abroad  but  at  home  do  we  find  this  to  be  the  practice.  In 
Great  Britain,  Germany,  and  France,  the  earnings  only  of  ships  are 
taxed; — not  the  capital  invested.  In  Austria  recently  all  taxes  on 
vessels  engaged  in  foreign  trade  were  suspended  for  five  years,  in 
order  that  this  industry  might  be  built  up  and  become  sufficiently 
strong  and  rich  to  afford  a  remunerative  harvest  at  the  end  of  such 
term.  Delaware  exempts  shipping  from  all  taxation.  New  York  and 
Alabama  exempt  their  shipping  in  the  foreign  trade  from  all  taxa- 
tion ;  Massachusetts,  New  Hampshire,  and  Connecticut  tax  the  earn- 
ings only  of  their  shipping  in  foreign  trade,  and  under  the  decision 
of  the  United  States  Supreme  Court,  Pennsylvania  imposes  no  tax  on 
its  shipping  in  interstate  or  foreign  trade.  The  heavy  taxes  levied 
for  limited  periods  on  the  importation  of  certain  foreign  goods  for 

[43] 


CHAPTER  V. 

the  protection  of  infant  industries  at  home,  seek  their  justification 
and  excuse  on  this  line  of  thought ;  and  the  wisdom  or  unwisdom  of 
their  imposition  from  the  point  of  view  of  economics  simply,  must 
abide  the  outcome  of  the  experiment.  All  exemptions  from  taxation 
are  based  on  considerations  of  public  policy ; — the  highest  public  policy 
is  that  which  sacrifices  a  present  given  measure  of  good  results  for  a 
future  increased  measure. 

"Whenever  governments  can  aid  directly  or  indirectly  in  so  in- 
creasing the  future  measure,  it  becomes  not  only  good  policy,  but  a 
duty  imposed  upon  the  directing  power  to  afford  such  aid. 

"In  the  case  of  the  local  loan  and  building  associations,  the  only 
aid  that  need  be  asked  under  this  head,  is  of  a  passive  nature.  No 
direct  action  of  any  kind  is  required,  it  is  but  necessary  that  they  be 
shielded  against  improper  impositions,  and  be  allowed  to  work  out 
their  own  salvation.  As  corporate  entities,  they  need  exemption  front 
taxation, — because  the  property  which  stands  for  and  as  their  assets, 
already  pays  its  just  and  equitable  share  to  the  government  for  the 
protection  it  receives  therefrom  in  the  shape  of  taxes  paid  by  the 
individual  shareholders; — and  because  as  corporations  purely  co- 
operative in  their  nature  they  cannot  afford  to  pay  what  would  be  in 
effect  a  double  taxation,  without  so  far  impairing  their  strength  as  to 
endanger  their  existence  and  destroy  their  usefulness. 

"As  corporate  entities  their  exemption  from  taxation  is  justified, 
because  to  a  far  greater  degree  than  the  charitable  and  educational 
institutions  quoted  above  as  being  so  generally  exempted,  do  they 
tend  to  advance  the  education  of  the  people,  and  conduce  to  their 
greater  progress  and  wealth-producing  power ;  and  to  a  greater 
degree  than  either  of  the  others  are  they  entitled  to  the  support  of 
that  healthy  moral  sentiment,  which  finds  in  home-ownership  the 
mainstay  of  enlightened  good  citizenship,  and  in  enlightened  good 
citizenship  the  only  safeguard  of  our  continued  existence  as  a  nation. 

"Again  on  the  theory  that  it  is  proper  and  far-sighted  economic 
policy  for  the  state  to  encourage  and  foster  the  growth  of  institu- 
tions which  will  create  new  wealth  for  its  future  support,  the  exemp-i 
tion  of  the  local  building  and  loan  associations  from  taxation,  is 
amply  justified. 

"Among  other  things  it  is  stated  :  'It  cannot  be  fairly  claimed  that  the 
bonds  and  mortgages  of  a  building  and  loan  association  are  property 
of  a  taxable  nature,  or  are  possessed  of  value  in  the  sense  had  in  mind 
by  the  framers  of  the  constitution  of  this  state  by  the  phrase  'subject 
to  taxation,'  because  they  have  no  exchangeable  value  whatever,  as 

[44] 


LEGISLATION  AND  TAXATION. 

they  are  absolutely  non-negotiable ;  not  having  been  given  by  one 
individual  to  another,  in  exchange  for  any  articles  of  value  advanced 
thereon,  but  being  merely  written  promises  by  one  member  of  a  class 
of  co-operators  to  the  other  members  of  the  same  class  that  they 
will  continue  to  co-operate  with  them,  in  accordance  with  the 
agreement  then  or  at  some  antecedent  date  entered  into  by  all  of 
them,  until,  by  the  result  of  their  joint  operation,  certain  ends  of  like 
usefulness  to  all  of  them  shall  have  been  attained.  This  promise  being 
only  one  of  a  mutual  set  of  promises  between  all  the  members  of  that 
class,  is  not  of  such  a  nature  that  it  can  be  assigned  or  transferred 
to  an  outsider  for  value,  by  either  of  the  parties  thereto,  so  as  to 
change  it  into  a  promise  of  the  repayment  of  a  certain*  sum  of  money 
advanced  on  its  strength,  in  a  different  manner;  i.  e.,  the  repayment 
in  bulk  of  the  total  moneys  advanced  to  the  borrowing  stockholder, 
after  the  manner  of  ordinary  notes  and  mortgages.  A  building  asso- 
ciation could  not  place  its  entire  collection  of  bonds  and  mortgages 
upon  the  market,  and  realise  a  single  dollar  by  the  sale  thereof;  it 
cannot  assign  them ;  it  cannot  dispose  of  them  in  any  way.  They 
represent,  in  each  such  transaction,  a  mere  agreement  between  two 
sets  of  stockholders,  or  between  the  borrowing  stockholder  in  the 
particular  transaction  and  itself  (i.  e,,  the  aggregation  of  all  the  stock- 
holders), to  the  effect,  not  that  the  borrowing  stockholder  will  at  any 
one  time  pay  the  amount  stipulated  in  the  said  bond,  but  that  he  will 
pay  to  his  co-stockholders,  being  the  loan  and  building  association, 
a  certain  stipulated  amount  per  week  or  month,  as  installments  on  his 
own  shares  of  stock,  with  interest,  etc.,  for  the  advancement  of  money 
to  him  thereon,  and  that  he  will  continue  such  payments,  until  the 
value  of  each  share  of  stock  in  the  series  held  by  him,  reaches  par; 
and  that  he  is  to  receive  a  release  of  the  mortgage  by  him  given  to  the 
association,  as  an  earnest  of  the  performance  by  him  of  the  condition 
of  his  bond.' 

"And  again,  'property'  is  defined  by  Bouvier  to  be  'an  exclusive 
right  of  things;  a  right  to  dispose  of  them,  either  by  exchanging 
them  for  other  things  or  by  giving  them  away  to  any  other  person 
without  consideration,  or  even  throwing  them  away;  thus  showing  that 
the  definition  of  the  legal  text  writer,  as  to  the  essence  of  value, 
accords  in  all  things  with  that  laid  down  by  the  political  economists. 
To  go  one  step  farther,  'valuable  property'  would  be  defined  to  be 
such  property  as  one  could,  under  ordinary  circumstances,  dispose  of 
for  a  valuable  consideration.  The  bonds  and  mortgages  of  a  build- 
ing and  loan  association  are  not  property  of  such  a  character;    as 

[45] 


CHAPTER  V. 

before  stated,  they  are  absolutely  valueless,  except  to  the  association 
itself,  and  to  that,  merely  as  an  evidence  of  the  advances  made  to  one 
of  its  stockholders  on  his  stock,  and  a  means  of  compelling  him  to 
continue  payment  of  installments  thereon  in  like  manner  as  his  brother 
stockholders,  to  whom  no  advances  have  as  yet  been  made;  under 
penalty  of  being  compelled  to  make  good  such  payments  out  of  the 
real  estate,  the  title  to  which  has  been  transferred  as  a  security  for 
the  performance  of  the  promise,  reduced  to  writing  in  said  bond, 
given  before  the  making  of  said  advances. 

"It  has  been  well  said  by  a  distinguished  author  (Perry)  that  'The 
right  to  tax  on  the  part  of  the  government  grows  out  of  the  whole 
service  rendered  by  the  government  to  the  individual ;  and  that  as  a 
return  service  (or  tax)  is  connected  with  and  limited  by  the 
exchanges  which  the  individual  makes  under  the  eye  of  the  govern- 
ment, the  tax  itself  should  be  proportioned  as  nearly  as  possible  to  the 
amount  of  those  exchanges,  and  should  be  justified  simply  on  the 
ground  of  them/ 

"As  before  shown,  in  the  advances  made  by  a  building  association 
to  one  of  its  co-operative  members  of  moneys  of  his  stock,  which  he 
pledges  to  said  association  with  the  promise  to  continue  to  make 
installment  payments  thereon  in  the  same  manner  and  amount  as  he 
had  been  making  as  a  simple  stockholder,  simply  adding  thereto 
interest  for  the  prior  use  of  the  money  contributed  to  a  general  fund 
by  himself  and  his  brother  stockholders,  and  further  secured  by  a 
pledge  of  the  real  estate  upon  which  he  is  paying  taxes  to  the  state, — 
in  such  a  transaction  there  are  no  exchanges,  in  the  commercial  accep- 
tation of  that  word ;  and  as  those  securities  are  not  transferable  by 
the  association  for  value,  or  otherwise,  and  are  held  simply  for  the 
performance  of  a  promise  made,  they  cannot  en<ter  into  the  subject  of 
exchanges;  hence,  there  is  no  possible  justification  for  the  exaction 
of  a  tax  thereon  by  the  governing  power. 

"Thus  viewed  from  economic,  ethical,  or  legal  standpoints,  the 
exemption  from  taxation  of  local  building  and  loam  associations 
appears  to  be  justified;  and  as  these  associations  are  the  wisest, 
best,  and,  hitherto,  most  practical  school  of  education  for  the  great 
wage-earning  class  which  our  civilization  has  evolved,  and  a  school 
which  rests  upon  a  membership  of  those  who  can  contribute,  not  in 
large  sums,  but  only  by  the  mites  saved  from  meager  earnings,  the 
necessity  of  fostering  and  sustaining  such  associations  for  the  direct 
and  indirect  advantages  accruing  therefrom  to  the  nation  must  be 
apparent,  and  in  conclusion,  therefore,  it  may  be  safely  said,  that  the 
necessity  of  exempting  them  is  the  best  justification  for  so  doing." 

[46] 


CHAPTER  VI. 


Forms  of  Associations. 


THE  TERMINATING  PLAN. 

The  building  association,  since  its  introduction  into  the 
United  States  fifty  years  ago,  has  appeared  in  three 
distinct  forms. 

The  first  associations  were  on  the  terminating  plan. 
These  were  useful.  They  have  now  largely  disappeared, 
having  given  way  to  more  popular  forms,  though  a  few 
are  still  in  existence. 

In  a  terminating  association  all  the  stock  is  issued  as 
of  one  date.  Such  an  association  is  organized  on  the 
presumption  that  all  the  stock  will  be  subscribed  at  the 
opening  meeting.  This,  however,  is  seldom  done.  The 
consequence  is  that  shares  sold  after  the  first  meetings 
must  be  sold  at  such  prices  as  to  make  them  equal  in  value 
to  those  already  issued.  To  do  this  a  sum  must  be  charged 
equal  to  the  amount  already  paid  in  as  installments  by  the 
subscriber  to  the  original  shares.  If  the  regular  dues  on 
shares  should  be  one  dollar  per  week,  a  person  subscribing 
for  a  share  after  the  association  has  been  running  ten 
weeks,  must  pay  ten  dollars  for  the  share.  In  like  manner, 
if  the  association  has  been  running  for  a  longer  period  he 
must  pay  an  additional  dollar  for  each  additional  week. 

[47] 


CHAPTER  VI. 

Moreover,  if  he  does  not  subscribe  until  after  profits  have 
been  declared,  he  must  pay  such  additional  amount  on  his 
shares  as  will  correspond  to  the  earnings  of  the  original 
shares  up  to  that  time.  The  same  rule  holds  through  the 
entire  existence  of  the  association,  each  year  making  it 
more  difficult  to  enter.  After  an  association  organized  on 
this  plan  has  run  for  a  time,  it  is  impossible  for  many 
persons  who  would  gladly  become  members  to  raise  a 
sufficient  sum  of  money  to  pay  up  the  back  installments, 
the  initiation  fees,  the  accrued  profits  and  other  incidental 
expenses.  In  its  practical  workings,  therefore,  an  associa- 
tion organized  on  this  plan  is  not  well  adapted  to  meet  the 
conditions  of  that  particular  class  of  persons  who  most 
need  such  an  organization  and  are  most  likely  to  be 
benefited  by  it. 

In  a  terminating  association  all  the  shares  are,  of  course, 
at  all  times  of  equal  value. 

Whenever  the  total  amount  of  dues  paid  in  and  of 
accumulated  profits  equals  the  par  value  of  all  the  shares, 
the  association  terminates,  and  its  affairs  must  be  wound 
up.  Each  stockholder  who  has  not  borrowed  his  money 
in  advance  receives  the  full  value  of  his  shares.  To  those 
who  have  secured  their  money  in  advance  their  mort- 
gages, canceled  and  receipted,  are  returned  in  full. 

THE  SERIAL  PLAN. 

The  second  form  of  association  is  the  serial.  It  is  a 
development  of  the  terminating.  By  some  this  is  called 
the  "Philadelphia"  or  'Tennsylvania"  plan.  In  this  form 
the  stock  is  issued  in  series — as  first  series,  second  series, 

[48] 


FORMS  OF  ASSOCIATIONS. 

and  so  on.  The  association  usually  is  chartered  for  a  certain 
number  of  years,  and  with  a  specified  amount  of  stock. 
Instead  of  selling  all  the  stock  as  of  the  same  date  it  is 
divided  into  series,  one  series  being  sold  as  of  the  date 
of  the  beginning  of  the  first  term,  the  second  series  as  of 
the  date  of  the  beginning  of  the  second  term,  and  so  on, 
until  all  the  shares  are  sold.  The  serial  issue  may  be 
monthly,  quarterly,  semi-annually,  annually,  or  otherwise, 
according  to  what  may  be  fixed  as  the  length  of  the  term. 
At  the  end  of  the  first  term  the  assets  of  the  association 
are  divided  by  the  total  number  of  shares  in  the  first  series, 
and  the  value  of  these  shares  at  this  time  is  thus  ascer- 
tained. The  second  series  is  then  issued  and  rated  at  par 
value.  The  shares  of  this  second  issue  run  in  the  same 
manner  as  those  of  the  first.  At  the  end  of  the  second 
term  the  sum  total  of  the  income  of  the  term  is  divided  by 
the  total  number  of  shares  in  both  series,  and  the  equitable 
withdrawal  value  of  shares  in  each  series  is  ascertained. 
Then  the  third  series  is  issued,  and  so  on  to  the  end.  It 
will  be  seen  that  under  this  plan  the  older  the  series  the 
greater  the  value  of  the  shares.  In  some  serial  associa- 
tions, members  may  join  one  of  the  older  classes  by  pay- 
ing in  what  would  be  the  total  amount  of  dues  and  a  pro- 
portionate share  of  the  profits,  that  is,  the  full  withdrawal 
value  of  the  shares  at  the  time  of  payment.  Sometimes, 
also,  on  the  issue  of  a  new  series  old  shares  are  with- 
drawn and  their  value  taken  up  in  the  shares  of  the  new 
series. 

Usually  after  an  existence  of  from  eight  to  ten  years 
the  first  series  reaches  its  ultimate  value, — that  is  to  say,  it 

[49] 


CHAPTER  VI. 

matures.  The  members  holding  these  shares  then  receive 
their  full  value  in  cash,  and  borrowing  members,  whose 
mortgages  become  released  with  the  maturing  of  the 
series,  receive  their  mortgages  canceled.  The  association 
now  has  reached  the  period  when  each  series  of  shares 
must  be  paid  up  as  it  matures.  If  it  is  running  success- 
fully it  secures  an  extension  of  its  charter.  It  then  con- 
tinues issuing  new  series  of  stock  at  the  beginning  of  each 
term.  If  its  full  amount  of  stock  has  been  subscribed  each 
new  series  now  takes  the  place  of  the  old  series  that  has 
matured,  so  that  the  total  number  of  shares  thenceforth 
continues  the  same. 

This  plan  may  be  compared  to  a  piece  of  machinery 
which  consists,  say  of  ten  cog  wheels,  which  operate  one 
grand  revolving  wheel.  These  ten  smaller  wheels  are 
numbered  from  one  to  ten  and  are  inserted  one  after 
another  in  their  regular  order. 

When  number  one  wears  out  at  the  end  of  ten  years  a 
new  number  one  is  inserted  in  its  place  which  will  run  ten 
years.  At  the  end  of  the  next  year  a  new  number  two  is 
inserted,  and  so  on,  continuously.  And  thus  the  old 
machine  is  kept  constantly  in  repair  and  in  perfect  operat- 
ing form. 

It  will  be  seen  that  the  serial  association  is  a  great 
improvement  over  the  old  terminating  plan,  inasmuch  as 
it  is  much  more  practicable  and  adaptable  in  its  operations 
to  the  demands  likely  to  be  made  upon  it.  It  provides  for 
the  constant  introduction  of  new  members  and  new  money, 
and  has  in  it  the  elements  of  permanency  and  perpetual 
operation. 

[50] 


FORMS  OF  ASSOCIATIONS. 

This  plan  originated  in  the  city  of  Philadelphia,  where 
building  associations  have  had  their  greatest  demonstra- 
tion of  practical  usefulness.  From  Philadelphia  it  spread 
abroad  until  it  became  the  prevailing  form  in  the  conduct 
of  associations  throughout  the  country. 

THE  PERPETUAL  OR  PERMANENT  PLAN. 

As  the  building  association  became  better  understood 
and  more  popular,  a  demand  arose  for  some  form  of  asso- 
ciation more  pliable  and  adaptable  than  either  the  term- 
inating or  the  serial  form.  A  new  modification  then 
appeared  which  has  been  styled  the  perpetual  plan.  This 
had  its  origin  in  Cincinnati  and  Ohio,  where  it  has  been 
very  successful  and  popular,  so  much  so  that  it  has  spread 
through  other  states.  Under  this  plan  associations  are 
granted  perpetual  charters,  the  amount  of  their  capital 
stock  being  fixed  at  a  certain  sum.  They  are  allowed  to 
begin  operations  as  soon  as  a  certain  portion  of  the  stock 
is  subscribed.  After  the  association  is  in  operation  new 
members  are  allowed  to  enter  at  any  time  on  an  equality 
with  the  original  subscribers,  the  stock  of  each  member 
dating  from  the  time  of  his  entry.  Thus  the  business  of 
the  association  runs  along  from  year  to  year  until  finally 
all  the  stock  is  subscribed,  when  an  additional  amount  of 
capital  stock  may  be  added.  After  a  time  the  shares  first 
issued  begin  to  reach  their  full  value. 

As  they  thus  mature  their  owners  draw  out  their  money 
— if  they  have  not  borrowed  it  in  advance — and  their 
shares  are  canceled  and  their  membership  ceases.  If  they 
have    borrowed    money    in    advance    their    mortgages 

[51] 


CHAPTER  VI. 

are  returned  to  them,  receipted  in  full.  If  a  member,  whose 
stock  has  thus  matured  has  not  borrowed  his  money  in 
advance  and  does  not  wish  to  draw  it  out,  a  certificate  of 
paid-up  stock  is  issued  to  him  and  he  leaves  his  money  in 
the  association  as  a  matter  of  investment. 

Under  this  plan  members  have  the  same  privileges  of 
withdrawal  as  of  entry.  They  may  withdraw  at  any  time 
by  complying  with  the  rules  of  the  association,  receiving 
their  equitable  share  of  the  assets.  Experience  has  shown 
that  it  is  possible  so  to  work  out  the  plans  for  the  calcula- 
tion of  dividends,  premiums,  interest,  etc.,  and  so  to 
arrange  all  the  other  details  of  the  operations  of  an  asso- 
ciation, as  to  be  able  to  treat  each  share  equitably  upon  its 
own  merits  without  in  any  way  interfering  with  the 
interests  of  any  other  share. 

This  form  of  association  is  a  still  further  development 
of  the  original  plan.  It  adapts  the  operations  of  such  a 
co-operative  society  to  the  actual  necessities  and  the  pos- 
sible emergencies  of  such  persons  as  need  its  benefits.  In 
a  sense  the  introduction  of  this  plan  marked  the  beginning 
of  a  much  more  general  popularity  of  associations.  Since 
its  introduction  they  have  begun  to  spring  up  in  large 
numbers  in  all  sections.  It  seems  likely  that  this  will 
become  the  general  form  which  building  and  loan  associa- 
tions will  eventually  adopt.  Nevertheless  many  and 
marked  improvements  are  still  to  be  expected. 

In  an  address  in  favor  of  the  permanent  plan  before  the 
U.  S.  League,  Mr.  K.  V.  Haymaker,  of  Defiance,  Ohio, 
makes  the  following  argument : 


[52] 


FORMS  OF  ASSOCIATIONS. 

It  was  soon  discovered  that  at  intervals  during  the  progress  of  the 
association,  outsiders  would  be  glad  to  subscribe  for  shares  and  enjoy 
the  profits  and  benefits  afforded  by  this  equitable  form  of  co-opera- 
tion :  This  terminating  association,  however,  offered  but  one  equitable 
plan  on  which  new  shares  could  be  subscribed  during  the  progress  of 
the  association;  that  was  for  the  new  meml^ers  at  the  time  of 
subscribing  for  shares  to  pay  in  a  sum  equal  to  all  the  dues  on  the 
share  subscribed  for  the  full  time  elapsed  since  the  date  of  organiza- 
tion, and  an  additional  sum  equal  to  a  pro  rata  share  of  the  accu- 
mulated earnings  of  the  association  up  to  the  date  of  his  subscription. 

It  frequently  happened  that  persons  thus  desirous  of  taking  shares 
found  themselves  unable  to  pay  up  the  back  dues  and  accumulated 
profits,  although  they  could  easily  afford  to  begin  at  that  date,  and 
thereafter  pay  the  regular  dues.  The  older  the  association  grew,  the 
more  difficult  and  expensive  it  became  for  new  members  to  take 
stock;  the  result  being  that  this  feature  of  associations  on  this  plan, 
necessarily  and  inevitably  limited  the  growth  and  usefulness  of  the 
association  to  the  members  who  joined  at  the  commencement  or 
shortly  thereafter.  The  inflexible  plan  of  the  association  on  one 
hand  and  the  poverty  of  the  prospective  members  on  the  other,  kept 
such  association  weak,  puny,  and  short-lived. 

There  was  but  one  method  under  this  plan  by  which  an  outside 
party  could  enjoy  the  benefits  of  the  building  association  scheme  ;  that 
was  to  gather  together  a  number  of  individuals  in  the  same  situation 
as  himself  and  organize  a  new  association.  It  was  a  very  natural 
and  logical  step  in  the  line  of  progress,  and  required  but  very  little 
change  in  the  plan  to  invent  the  "serial"  idea  of  prolonging  the  life 
and  extending  the  influence  of  the  terminating  association.  The 
officers,  managers,  directors,  and  all  the  necessary  machinery  for  the 
conduct  of  a  new  association  were  already  organized  and  in  work- 
ing order  managing  the  affairs  of  the  old  one.  Without  greatly 
increasing  their  labors  the  same  officers  could  readily  manage  two  or 
more  associations ;  and  so  it  came  about  that  when  an  association  had 
reached  the  age  that  made  it  difficult  and  expensive  for  new  members 
to  join,  it  became  the  natural  and  logical  step  for  the  officers  of  the 
association  to  heed  the  demand  of  their  neighbors  for  additional 
accommodations  in  this  line,  and  organize  a  new  association  to  be 
conducted  by  them  precisely  as  the  original  association  had  been  run; 
and  this  in  time  to  be  supplemented  by  a  third,  and  so  on.  The  serial 
plan  being  in  brief,  a  confederation  of  terminating  associations. 

By  thus  prolonging  the  life  of  an  association  and  extending  its 
influence  and  increasing  its  membership,  a  vast  widening  of  useful- 

[53] 


CHAPTER  VI. 

ntess  was  accomplished;  the  introduction  of  the  serial  plan  marks  a 
distinct  epoch  in  the  evolution  of  the  building  and  loan  system. 

This  serial  plan  was  the  natural  outgrowth  demanded  by  the  evils 
and  inconvenient  features  of  the  original  terminating  plan.  Among 
these  objectional  features  which  seriously  interfered  with  the  useful- 
ness of  these  institutions  and  hedged  their  growth  within  narrow 
limits,  was  the  fact  that  this  scheme  contemplated  uniform  payments 
among  all  the  membership  in  proportion  to  the  shares  they  respectively 
held.  In  case  the  stockholder  should  later  on  find  himself  in  a  posi- 
tion where  he  could  easily  make  larger  contributions,  or  carry  a 
greater  number  of  shares,  the  rigid,  inflexible  plan  of  the  association 
made  it  extremely  difficult  for  him  to  avail  himself  of  such  privilege. 
Or  on  the  other  hand,  in  case  he  found  that  he  had  overestimated 
his  ability  to  carry  shares  and  that  he  had  assumed  a  greater  burden 
than  he  could  sustain,  it  became  still  more  inconvenient  and  difficult 
to  adjust  his  payments  to  his  reduced  circumstances  without  serious 
loss.  In  short,  this  plan  offered  no  inducement  to  a  member  to  save 
more  money  than  his  original  subscription  provided,  or  at  a  faster 
rate  than  his  agreement  contemplated,  and  at  the  same  time  made  it 
compulsory  on  him  to  keep  up  his  required  payments  even  though 
he  found  later  on  that  it  would  be  an  intolerable  burden  for  him  to 
do  so. 

Another  serious  objection  to  the  terminating  plan  was  the  fact  that 
it  contemplated  that  each  stockholder  should  at  some  time  become  a 
borrower  from  the  association ;  and,  of  course,  none  but  stockholders 
could  be  borrowers.  It  frequently  occurred  that  in  such  associations 
many  of  the  members  did  not  require  loans;  and  if  such  members 
happened  to  be  numerous  the  funds  of  the  association  would 
accumulate  and  lie  idle,  after  those  desiring  loans  had  been  accom- 
modated, because  none  of  the  membership  had  use  for  the  money. 
To  obviate  this  difficulty  such  associations  usually  determined  by  lot, 
which  of  the  non-borrov*'ing  members  should  be  required  to  with- 
draw their  shares,  and  receive  their  money  even  though  such  member 
preferred  not  to  do  so.  Thus  the  association  would  find  its  assets 
reduced  by  the  shares  thus  forced  out  and  by  the  funds  thus  paid  over 
to  a  member  who  did  not  desire  his  money  at  the  time ;  while  in  the 
community  there  were  doubtless  many  persons  not  members  who 
would  have  been  glad  of  the  opportunity  of  borrowing  the  funds,  but 
were  debarred  from  doing  so  by  the  burdensome  conditions  with 
which  they  were  required  to  comply  before  they  could  become  stock- 
holders of  the  association  and  be  entitled  to  the  privilege  of  bor- 
rowing.   In  some  cases  shares  thus  forced  out  were  not  given  their 

[54] 


FORMS  OF  ASSOCIATIONS. 

entire  pro  rata  portion  of  the  profits  already  accumulated,  but  were 
allowed  an.  arbitrary  bonus  somewhat  less  than  a  pro  rata  share  of 
the  profits.  In-  other  cases  idle  funds  were  disposed  of  by  offering  a 
bonus  above  the  pro  rata  share  of  earnings  as  an  inducement  to 
members  to  withdraw  voluntarily.  The  result  in  each  case  was 
equally  unsatisfactory,  the  first  plan  being  unjust  to  the  withdraw- 
ing members,  and  the  other  being  unjust  to  the  remaining  members. 

The  serial  plan  does  not  abolish  or  obviate  these  difficulties,  but 
merely  mitigates  the  evil  in  a  degree,  and  renders  them  slightly  less 
objectionable.  Most  serial  associations  have  adopted  a  feature  which 
is  a  great  improvement  on  the  terminating  plan,  viz.:  in  serial  asso- 
ciations it  is  now  usual  to  distribute  the  profits  and  credit  them  up  to 
the  shares  either  annually  or  semi-annually  instead  of  keeping  them 
undistributed  until  the  series  terminates.  Each  series  of  stock  runs 
independent  of  the  others  and  each  has  its  own  time  of  maturing. 
New  members  are  only  required  to  pay  back  dues  from  the  date  of 
the  issue  of  the  series  which  he  joins,  and  all  the  shares  of  a  series 
are  thus  kept  of  equal  value.  The  serial  plan,  however,  retains  orhe 
objectionable  feature  of  the  terminating  association  which  necessarily 
limits  the  growth  and  narrows  the  field  which  they  occupy. 

Under  this  plan  each  member  becomes  one  of  a  class  with  whom 
he  must  keep  even  step  during  the  life  of  the  series  to  which  his 
stock  belongs.  He  must  not  pay  more  than  his  regular  dues,  for  that 
would  disturb  the  even  value  of  the  shares,  and  he  must  not  become 
delinquent  for  t-he  same  reason.  He  must  gauge  his  payments,  not 
by  his  own  circumstances  and  ability  to  pay,  but  by  what  his  co-mem- 
bers in  his  series  are  paying.  He  must  simply  keep  step  with  the 
procession ;   being  neither  allowed  to  quicken  his  pace  nor  lag  behind. 

All  the  shares  of  each  series  mature  at  the  same  time,  and  at 
maturity  the  association  is  expected  to  pay  off  all  the  shares  in  the 
series  at  their  par  value.  This  brings  us  to  one  of  the  most  perplex- 
ing problems  which  confront  the  managers  of  the  serial  association. 
Whenever  you  find  a  meeting  of  building  association  men  gathered 
together,  if  their  companies  are  organized  on  the  serial  plan,  you  will 
find  a  great  portion  of  their  time  spent  in  discussing  the  various 
plans  by  which  they  can  liquidate  and  pay  off  the  matured  series  with 
the  least  trouble,  annoyance  and  loss.  To  such  associations  it  is 
doubtless  a  problem  of  sufficient  gravity  to  deserve  all  the  time  and 
attention  which  is  devoted  to  it.  It  is  easy  to  understand  the  gravity 
of  the  situation  when  officers  of  building  associations  are  looking 
forward  to  a  date  in  the  near  future  when  a  series  of  stock  is 
approaching  maturity,  aggregating  say  three  or  four  hundred  shares 

[55] 


CHAPTER  VL 

with  a  par  value  of  thirty  or  forty  thousand  dollars,  and  contemplate 
the  fact  that  this  amount  of  cash  must  be  in  the  treasury  at  the 
appointed  date.  The  mere  question  of  raising  and  accumulating  this 
large  fund  is  a  problem  not  always  easy  of  solution,  and  aside  from 
this,  there  are  other  phases  of  the  question  which  add  to  the  complica- 
tion. For  weeks,  perhaps  months  ahead,  funds  must  be  retained  in 
the  treasury  instead  of  being  used  to  fill  pending  applications  for  loans. 
This  idle  money  earn-s  nothing.  The  association  is  deprived  of  the 
profits  which  this  fund  might  otherwise  earn  during  the  weeks  and 
months  it  is  being  accumulated.  Or  suppose  an  association  borrows 
the  funds  to  meet  a  matured  series  instead  of  hoarding  its  receipts 
for  the  purpose.  In  such  case  the  result  is  alike  unprofitable.  The 
borrowed  moniey  draws  interest  which  the  association  must  pay.  In 
any  aspect  of  the  case  the  certainty  of  being  required  to  pay  so  large 
an  amount  of  money  at  a  time  certainly  presents  most  disagreeable 
and  perplexing  dilemmas  to  a  building  association. 

All  these  objections  and  difficulties  and  problems  which  are  so 
annoying  and  perplexing,  and  which  so  limit  and  circumscribe  the 
business  of  the  terminating  and  serial  associations,  fade  away  and 
disappear  or  at  least  lose  all  their  terrors  in  associations  issuing  stock 
on  a  permanent  plan. 

In  conducting  the  building  association  under  this  plan,  persons  are 
permitted  to  subscribe  for  stock  at  any  time.  Each  stockholder's 
shares  are  treated  as  a  separate  series,  and  an  account  is  kept  with 
each  member  of  the  dues  paid  in  by  him  on  his  stock  and  of  the 
dividends  to  which  he  is  entitled  at  each  annual  or  semi-annual 
distribution  of  profits.  In  the  development  and  conduct  of  asso- 
ciations under  this  plan  in  Ohio,  building  association  managers  have 
learned  that  the  more  liberal  and  equitable  an  association  can  treat 
its  membership,  and  the  more  privileges  are  extended  to  them,  the 
more  popular  and  successful  the  association  proves  to  be.  Under 
this  plan  of  liberal  treatment  and  the  extension  of  privileges  to 
members,  many  of  the  old  practices  and  customs  which  were  supposed 
to  be  essential  to  building  association  management  have  entirely  dis- 
appeared. Among  these  may  be  mentioned  the  fact  that  few  associa- 
tions int  Ohio  today  exact  any  membership  or  initiation  fee  from 
persons  subscribing  for  stock.  The  charge  of  a  nominal  sum,  usually 
25  cents,  for  a  pass-book,  is  the  only  remnant  of  the  old  practice  of 
demanding  an.  initiation  fee  of  so  much  per  share.  Then  again,  the 
practice  of  compelling  non-borrowing  members  to  keep  up  their 
regular  dues  by  imposing  a  fine  for  each  delinquency  is  fast  dis- 
appearing.   A  large  and  increasing  number  of  our  associations  have 

[56] 


FORMS  OF  ASSOCIATIONS. 

entirely  abolished  the  practice  of  imposing  fines  upon  delinquent 
depositing  members.  These  stockholders  are  permitted  to  regulate 
their  payments  by  their  own  convenience  and  the  circumstances  in 
which  they  may  find  themselves.  They  are  permitted  to  pay  in  excess 
of  their  regular  dues  or  to  pay  less  or  to  cease  paying  altogether  if 
they  so  desire.  We  have  found  that  it  is  a  fixed  principle  in  human 
nature,  that  when  an  individual  is  driven  to  a  certain  course  of 
procedure  through  a  fear  of  punishment,  even  though  that  punish- 
ment be  merely  the  assessment  of  a  fine  by  a  building  and  loan  asso- 
ciation, his  duty  will  be  don«  grudgingly,  unwillingly,  and  with 
bad  grace. 

The  American  people  dislike  to  be  driven,  and  the  feeling  that  mem- 
bership in  a  building  association  will  compel  a  man  to  maintain  his 
payments  regularly  will  result  in  keeping  more  men  out  of  member- 
ship entirely,  and  will  result  in  greater  loss  in  business  to  an  associa- 
tion than  all  it  can  possibly  gain  from  a  rigid  enforcement  of  fines 
upon  delinquent  members.  Hence  the  idea  has  taken  root,  and  is 
rapidly  spreading  among  our  permanent  associations  of  permitting 
the  widest  liberties  to  stockholders  in  the  matter  of  the  amount  and 
times  of  their  payments.  In  distributing  the  dividends  to  stockholders 
the  basis  on  which  it  is  figured  and  credited  up  to  the  individual 
members  is  the  sum  which  the  several  members  have  actually  paid  in 
and  which  remains  to  their  credit.  Stockholders  very  soon  learn 
that  their  share  of  the  dividends  depends  upon  the  amount  of  their 
payments  and  the  result  is  that  in  those  associations  which  are  thus 
liberal  to  their  members,  the  majority  of  them  pay  their  shares  far  in 
advance,  and  the  delinquent  depositor  is  the  exception  rather  than 
the  rule. 

The  borrowers  are  treated  in  a  manner  almost  equally  liberal.  The 
minimum  payments  which  borrowers  are  required  to  pay  are  fixed  at 
a  small  sum,  usually  25  cents  per  week  on'  each  one  hundred  dollars 
of  loan.  This  payment  covers  interest,  premium,  and  a  portion  to  apply 
on  their  stock.  This  required  minimum  payment  gives  the  borrower 
from  ten  to  twelve  years  in  which  to  pay  off  his  loan. 

He  is  permitted,  however,  to  pay  at  any  time  any  additional  sums  in 
excess  of  this  required  payment,  which  his  circumstance  and  inclina- 
tion may  enable  him  to  pay.  The  field  is  left  open  for  each  bor- 
rower to  do  the  very  best  he  can,  and  discharge  his  entire  indebted- 
ness, or  any  part  of  it,  whenever  it  suits  his  convenience.  The  pay- 
ment of  this  minimum  amount  by  the  borrower  is  enforced  by  the 
assessment  of  a  small  fine  for  delinquency.  Any  extra  sum  paid  in 
excess  of  the  required  minimum  payment  is  credited  to  him  as  pay- 

[57] 


CHAPTER  VI. 

ments  in  advance,  and  he  is  not  treated  as  delinquent  until  the  time 
has  elapsed  for  which  these  extra  sums  paid  the  dues  in  advance. 

These  provisions  prove  a  great  incentive  to  the  average  borrower  to 
pay  more  than  his  regular  dues,  and  pay  off  his  loan  as  rapidly  as 
his  circumstances  will  permit.  Of  course  it  is  understood  that  the 
borrower  participates  in  the  dividend  the  same  as  the  non-borrower, 
the  basis  on  which  his  dividend  is  figured  being  the  sum  of  his  pay- 
ments, less  the  amount  deducted  therefrom  for  interest,  premium, 
fines,  etc. 

These  associations  also  accumulate  and  maintain  a  reserve  fund  for 
the  payment  of  contingent  losses.  This  is  now  made  compulsory  on 
all  permanent  associations  by  the  statutes  of  Ohio,  which  require  that 
at  least  five  per  cent  of  the  net  earnings  shall  each  year  be  set  aside 
for  the  funds  of  contingent  losses,  until  such  fund  shall  equal  at 
least  five  per  cent  of  the  outstanding  loans.  The  balance  of  the  earn- 
ings, after  paying  the  expeness,  are  distributed  among  the  stock- 
holders pro  rata  in  proportion  to  the  amount  paid  in  on  their  stock. 

The  fact  that  the  permanent  plan  of  building  associations  deals 
with  each  stockholder  individually,  and  not  with  a  number  of  stock- 
holders, as  a  group,  permits  such  associations  to  deal  with  the  greatest 
liberality  with  their  membership  in  the  manner  of  withdrawals.  The 
stockholder  is  not  only  permitted  to  consult  his  own  convenience  in 
regard  to  the  time  and  amount  of  his  deposits  or  stock  payments,  but 
he  is  also  allowed  the  same  discretion  and  liberal  treatm.ent  in  regard 
to  the  withdrawal  of  the  payments  he  has  made  on  his  stock.  He  is 
permitted  to  continue  his  payments  until  his  stock  has  matured,  and 
even  then,  if  he  so  desires,  he  can  permit  his  money  to  remain  in 
the  association,  until  such  time  as  he  may  have  need  for  it.  In  case, 
however,  he  should  at  any  time  desire  to  withdraw  a  portion  of  his 
stock  payment,  or  all  of  it,  he  is  permitted  to  do  so,  usually  upon 
demand.  Associations  protect  themselves,  however,  by  a  provision  in 
their  by-laws,  which  is  in  substance  as  follows : 

"Members  may  withdraw  all  or  any  part  of  the  money  paid  upon 
stock  subscriptions  at  any  time  by  giving  notice  to  the  secretary, 
and  liability  to  make  further  payments  on  the  stock  and  the  right 
to  further  dividends  shall  cease  with  said  notice.  When  such  with- 
drawal is  total  the  withdrawing  member  shall  be  entitled  to  receive 
all  payments  made  upon  the  stock  withdrawn,  and  all  dividends 
declared  thereon  up  to  the  date  of  notice ;  provided  that  if  the  applica- 
tions for  withdrawal  at  any  time  exceed  the  weekly  receipts,  such 
applications  shall  be  filed  in  the  order  in  which  they  are  received  and 

[58] 


FORMS  OF  ASSOCIATIONS. 

paid  in  the  order  in  which  they  are  filed,  as  fast  as  the  weekly  receipts 
will  pay  them." 

This  permanent  plan,  which  permits  a  stockholder  to  deposit  his 
money  at  such  times  and  in  such  amounts  as  may  suit  his  corb- 
venience  or  ability,  which,  also,  permits  him  to  withdraw  his  pay- 
ments and  accumulated  profits  whenever  he  desires  to  do  so ;  together 
with  that  feature  of  the  plan  which  permits  new  members  to  sub- 
scribe for  stock  at  any  time,  produces  this  result;  it  frees  these 
associations  entirely  from  that  dreaded  experience  of  serial  associa- 
tions; that  of  having  to  meet  and  pay  off  an  entire  series  of  stock 
at  one  time.  The  applications  for  withdrawal  come  in  at  irregular 
intervals,  some,  perhaps  every  week.  The  usual  experience  is,  how- 
ever, that  these  applications  can  easily  and  conveniently  be  paid  from 
the  regular  weekly  receipts  and  still  leave  over  a  margin  which  the 
association  can  loan  out.  If  it  should  occasionally  happen,  as  it  is 
almost  sure  to  do,  that  the  applications  for  withdrawal  exceed  the 
weekly  receipts,  the  difficulty  is  easily  and  smoothly  remedied  by 
suspending  the  making  of  loans  for  a  short  period,  until  the  applica- 
tions for  withdrawal  are  satisfied. 

It  would  seem  to  require  no  argument  to  prove  that  an  associa- 
tion will  be  most  prosperous  where  the  receipt  and  disbursement  of 
funds  continues  in  a  steady,  regular  flow,  without  spasmodic  inter- 
vals where  enormous  sums  must  be  met  at  one  time.  Such  events 
interrupt  the  regular  course  of  business,  and  cannot  be  beneficial. 
Of  course,  under  the  permanent  plan  large  sums  in  the  aggregate 
may  be  demanded  on  withdrawal  applications,  but  the  plan  of 
requiring  such  applications  to  be  filed  and  paid  in  regular  order  from 
the  receipts  of  the  association  forfeiting  all  share  of  the  earnings 
from  the  date  of  s«ch  notice,  enables  the  association  to  meet  such 
contingencies  without  loss. 

It  is  a  disagreeable  state  of  affairs  to  have  the  application  for 
withdrawals  exceed  the  weekly  receipts.  So  very  undesirable  is  such 
a  contingency  that  to  us  it  seems  almost  folly  to  embody  in  the  plan 
itself  features,  which  makes  it  absolutely  certain  that  at  frequent 
intervals  the  association  will  be  required  to  meet  demands  largely  in 
excess  of  the  ordinary  receipts. 

Permanent  associations  usually  provide  in  their  by-laws  that  stock 
withdrawn  between  dividend  days  receives  no  part  of  the  earnings 
accumulated  since  the  last  dividend  was  declared.  Since  this  is 
usually  a  larger  sum  than  the  money  would  earn  for  the  association 
during  the  time  they  are  accumulating  money  to  meet  withdrawals, 
the  association  realizes  a  profit  on  funds  thus  withdrawn,  instead  of 

[59] 


CHAPTER  VL 

suffering  a  loss  such  as  serial  associations  are  required  to  stand  while 
accumulating  funds  to  meet  the  withdrawal  of  a  whole  series. 

The  entire  plan  of  this  permanent  building  and  loan  system  is 
simple,  logical  and  reasonable.  It  makes  each  stockholder  practically 
independent  of  his  fellow.  If  in  a  group  of  stockholders  one  should 
prove  more  successful,  more  enterprising,  or  more  economical  than 
his  fellow,  and  should  evidence  these  traits  by  larger  payments  upon 
his  stock  subscription,  he  receives  his  reward  in  a  larger  portion  of 
the  profits  each  dividend  day  and  is  not  restricted  and  hampered  by 
his  less  enterprising  or  more  extravagant  neighbor  and  co-member, 
who  may  prefer  to  waste  his  substance  in  riotous  living  rather  than 
accumulating  in  a  building  and  loan  association.  Each  memiber  is 
rewarded  in  the  exact  proportion  to  the  economy  and  self-denial 
which  he  practices  and  the  faithfulness  with  which  he  keeps  up  his 
required  payments  or  the  enterprise  with  which  he  pays  more  than  the 
required  sum.  When  a  member  fails  or  ceases  to  pay  he  is  not 
punished  for  the  default;  but  his  dividends  do  not  increase;  they 
remain  at  the  same  figure  each  dividend  day  until  he  again  resumes 
his  payments. 

Reference  has  only  been  made  to  some  of  the  leading  features  which 
seem  to  make  the  permanent  plan  of  issuing  stock  in  a  building  and 
loan  association  far  superior  to  any  other  plan  that  has  as  yet  been 
devised.  The  friends  of  this  system  do  not  claim  that  it  has  reached 
perfection,  or  that  it  is  without  faults,  but  do  claim  that  it  possesses 
many  points  of  excellence,  which  renders  it  far  superior  to  the  serial 
plan.  There  is  one  test,  however,  which  should  decide  the  contest  and 
from  which  there  seems  to  be  no  appeal,  and  that  is  the  test  of 
experience.  To  this  test  the  friends  of  the  permanent  plan  gladly 
submit  the  question  for  decision. 

The  friends  of  this  system  of  issuing  stock  confidently  commend  it 
to  building  and  loan  associations  everywhere,  believing  that  the  intro- 
duction of  this  system  will  widen  the  field,  extend  the  influence,  and 
render  more  popular  the  building  and  loan  system  of  accumulating  and 
investing  money,  and  believe  that  the  extension  of  the  building  and 
loan  system  will  have  a  beneficent  effect  in  many  ways,  and  will  tend 
in  great  measure  to  solve  happily  many  vexed  problems  which  now 
disturb  society,  and  even  threaten  the  life  of  our  government  itself. 


[60] 


CHAPTER  VII. 


How  to  Organize. 


NECESSARY  CONDITIONS. 

In  seeking  to  establish  a  building  association,  it  is  neces- 
sary to  bear  in  mind  the  conditions,  which  have  already 
been  stated,  which  are  essential  to  make  such  a  co-opera- 
tive undertaking  successful.  There  must  be  a  community 
of  wage-earners,  or  of  persons  with  small  incomes,  and 
the  element  of  permanency  in  the  local  enterprises  from 
which  the  incomes  of  the  community  are  derived.  This 
element  of  permanency  is  usually  found  in  the  extensive 
manufacture  of  staple  articles,  in  the  sale  of  the  same  in 
populous  districts,  in  market-gardening  and  other  forms 
of  agricultural  pursuits,  in  mining  and  in  numerous  other 
industrial  occupations. 

Building  associations  have  so  multiplied  in  some  com- 
munities that  there  is  already  competition  among  them. 
Where  numerous  associations  already  exist  of  course  the 
question  must  be  carefully  considered  as  to  whether  there 
is  a  real  demand  for  another.  Associations  are  sometimes 
brought  into  existence,  not  so  much  from  the  actual  wants 
of  the  people  who  are  induced  to  become  members,  as  in 
response  to  the  efforts  of  some  individual  or  individuals 
who  have  their  own  private  ends  in  view.    Some  person 

[61] 


CHAPTER  VII. 

engaged  in  trade  of  some  character  may  desire  to  organize 
an  association  and  have  it  meet  at  his  place  of  business 
or  in  his  vicinity  so  as  to  draw  in  custom  for  him.  Some 
attorney  may  take  an  active  part  in  the  organization  of  an 
association  in  order  to  increase  his  clientage.  Some  one 
interested  in  a  real  estate  transaction  may  organize  an 
association  in  order  to  find  a  market  for  his  lands.  These 
motives  are  all  well  enough  in  their  way,  provided  there 
is  back  of  them  a  real  need  for  an  association  on  the  part 
of  the  people  themselves  who  are  to  compose  it. 

As  matters  now  are  in  some  communities  it  would  seem 
far  more  proper  to  consider  the  question  of  consolidation, 
and  the  reduction  rather  than  the  increase  of  the  number 
of  associations. 

PRELIMINARY   STEPS. 

Great  importance  attaches  to  the  first  steps  taken 
toward  the  organization  of  an  association.  Unless  a  good 
foundation  is  laid  in  the  beginning  the  enterprise  will 
most  likely  prove  a  failure.  Great  care  must  be  taken  to 
have  only  trustworthy  men  connected  with  the  initial,  as 
well  as  all  subsequent  proceedings. 

When  the  proper  persons  have  been  interested  in  the 
movement  it  is  well  for  them  to  attach  their  names  to  an 
agreement  to  share  equally  in  the  liability  for  the  pre- 
liminary expenses,  such  as  advertising,  rent  of  place  of 
meeting,  blank  books,  books,  etc.  A  public  meeting  of 
those  interested  should  then  be  called  in  some  convenient 
and  respectable  place.  At  this  meeting  temporary  officers 
should  be  chosen.    These  consist  usually  of  a  chairman,  a 

[62] 


HOW  TO  ORGANIZE. 

secretary,  a  treasurer,  and  an  attorney.  These  should  be 
persons  of  some  influence  in  the  community,  and  should 
have  had  some  experience  in  conducting  public  meetings. 
Some  one  should  be  present  at  such  meeting  who  is  pre- 
pared to  make  a  clear  explanation  of  the  purposes  and 
workings  of  a  building  association.  After  this  explanation 
is  made  the  subject  should  be  thrown  open  for  general  dis- 
cussion under  the  usual  parliamentary  rules. 

It  may  not  be  possible  at  the  first  meeting  to  determine 
finally  in  reference  to  the  advisability  of  attempting  to 
organize  an  association.  The  meeting  may  decide  to 
appoint  solicitors  to  make  a  preliminary  canvass,  so  as  to 
discover  the  probability  of  securing  a  sufficient  number  of 
subscribers  to  justify  the  attempt.  For  this  or  other  satis- 
factory reasons  it  may  be  necessary  to  hold  a  number  oi 
preliminary  meetings  before  attempting  a  permanent 
organization. 

It  will  not  be  out  of  place  to  caution  that  much  care 
should  be  exercised  in  keeping  the  preliminary  expenses 
as  low  as  possible.  Services  rendered  by  individuals 
should  generally  be  gratuitous,  and  the  expenses  for  neces- 
sary supplies  may  be  made  merely  nominal. 

CHOICE  OF  NAME. 

When  it  shall  have  been  decided  finally  to  proceed  with 
the  organization,  the  first  thing  to  be  done  is  to  choose  a 
name.  In  making  this  choice  the  following  matters  must 
be  borne  in  mind :  ( 1 )  That  the  name  must  in  its  form 
correspond  to  the  requirements  of  the  statute  under  which 
the  association  is  to  organize ;   (2)  It  must  not  be  identical 

[63] 


CHAPTER  VII. 

with,  or  bear  a  close  and  misleading  resemblance  to  the 
name  of  some  other  similar  organization  in  the  place 
where  organized;  (3)  It  must  not  be  of  such  general 
descriptive  character  that  the  association  cannot  by  using 
it  acquire  exclusive  rights  in  it;  (4)  The  name  must  not 
be  improperly  or  prejudicially  assumed,  and  must  not  be 
misleading  in  its  form  or  character. 

CAPITAL  STOCK. 

It  will  be  necessary  also  at  an  early  stage  in  the  pro- 
ceedings to  determine  upon  the  amount  of  capital  stock 
of  the  proposed  association  and  the  number  and  value  of 
shares.  This  is  necessary  in  order  that  the  subject  may  be 
canvassed  intelligently  in  the  community.  The  number 
and  amount  of  shares  should  be  determined  by  the  local 
circumstances.  In  larger  cities  the  capital  stock  of  asso- 
ciations varies  from  $200,000  to  $5,000,000.  Shares 
range  from  $100  to  $500  each.  The  regular  dues  or  stock 
payments  are  generally  25  cents,  50  cents,  or  $1.00.  In 
the  smaller  towns  the  capital  stock  of  associations  varies 
from  $50,000  to  $1,000,000,  shares  being  from  $100  to 
$500  each,  payable  in  weekly  or  monthly  installments. 
The  number  of  shares  which  one  member  may  hold  should 
be  restricted  within  reasonable  limits  so  that  the  associa- 
tion cannot  be  controlled  by  a  few  large  shareholders. 
This  is  especially  necessary  when  stockholders  are  allowed 
as  many  votes  as  they  have  shares  of  stock.  In  some  states 
the  laws  provide  that  no  stockholder  may  vote  more  than 
a  certain  number  of  shares, — twenty  for  instance, — 
though  he  may  own  as  many  as  he  desires. 

[64] 


HOW  TO  ORGANIZE. 

The  name  of  an  association  and  the  amount  and  value 
of  stock  are  of  course  finally  recorded  in  the  constitution 
and  articles  of  incorporation.  The  whole  subject  of 
Capital  Stock,  which  is  of  great  importance,  is  fully  dis- 
cussed in  its  appropriate  place  in  another  part  of  this 
work.* 

THE  CONSTITUTION. 

The  most  important  matter  connected  with  the  organ- 
ization of  an  association  is  the  framing  of  the  rules  or 
articles  under  which  it  is  to  operate.  This  task  should  be 
placed  in  the  most  competent  and  experienced  hands,  and 
their  work  should  be  carefully  scrutinized  before  adop- 
tion. That  part  of  the  rules  which  is  to  become  the 
organic  law  of  the  association,  the  constitution,  in  its 
essential  features  at  least,  in  some  states  must  pass  under 
the  inspection  and  approval  of  the  incorporating  author- 
ities, and  in  fact  form  part  of  the  articles  of  incorporation. 
As  the  constitution  becomes  the  fundamental  law,  it 
should  be  framed  with  a  view  to  permanency,  allowing 
only  the  most  imperative  necessity,  and,  as  nearly  as  pos- 
isble,  unanimity  to  change  it.  for  this  reason  its  provi- 
sions should  be  well  understood  and  be  clad  in  plain 
language,  devoid  of  clouded  and  doubtful  phrasing.  All 
minor  regulations  should  be  omitted  therefrom  and  be 
reserved  for  the  by-laws  and  rules  of  business. 

Not  only  should  the  constitution  have  the  utmost  care 
and  forethought  on  the  part  of  those  drafting  and  adopt- 
ing it,  but  it  should,  if  possible,  be  based  upon  some  model 


See  Chapter  VIII. 

[65] 


CHAPTER  VII. 

which  has  stood  the  test  of  experience.  It  is  found  that 
much  the  larger  part  of  the  litigation  that  has  arisen  in 
the  different  states  in  connection  with  building  association 
affairs,  is  owing  to  the  careless  and  crude  manner  in  which 
constitutions  and  rules  are  framed.  Courts  have  com- 
plained much  about  the  negligence  displayed  in  the  word- 
ing of  these  important  documents.  It  is  not  uncommon 
indeed  to  find  contradictory  provisions  in  the  same  consti- 
tution relating  to  important  matters. 

BY-LAWS. 

After  the  constitution  has  been  adopted,  a  set  of  by- 
laws should  be  prepared  for  the  internal  government  of 
the  association  in  accordance  with  the  constitution  and 
with  generally  accepted  parliamentary  usage.  Many  asso- 
ciations make  the  mistake  of  including  all  their  rules  in 
the  constitution.  The  by-laws  are  not  of  an  organic  char- 
acter but  simply  express  an  agreement  among  the  mem- 
bers as  to  how  the  different  parts  of  the  work  of  the  asso- 
ciation should  be  carried  on.  They  should  therefore  be 
kept  separate  from  the  constitution  so  that  they  may  be 
changed  and  modified  from  time  to  time  as  may  suit  the 
convenience  or  necessities  of  the  association  and  its  officers 
and  members. 

The  by-laws  must  conform  to  the  constitution  of  the 
association  and  to  the  general  principles  of  common 
justice  and  equity  and  must  be  reasonable  in  their  require- 
ments. A  by-law  is  presumed  to  be  enacted  by  the  com- 
mon consent  of  all  the  members  of  the  association.  If 
therefore  a  by-law  shall  be  enacted  that  infringes  upon  the 


HOW  TO  ORGANIZE. 

common  rights,  or  the  rights  established  by  contract  of 
any  member,  it  is  void.  In  like  manner,  if  a  by-law  is 
repealed  and  thus  injustice  is  done  to  any  member  whose 
rights  were  before  protected  by  the  by-law,  such  action  is 
void.  The  enactment  of  new  by-laws  cannot  add  addi- 
tional requirements  to  contracts  in  existence  before  their 
enactment.  By-laws  must  not  be  enacted  which,  from 
their  nature,  cannot  be  enforced,  or  which  are  evidently  of 
a  "vexatious,  nugatory,  and  oppressive"  character.  Nor 
can  a  by-law  be  enacted  which  has  the  effect  of  restricting 
any  member  from  legal  rights  and  remedies.* 

INCORPORATION. 

The  different  states  have  different  methods  of  provid- 
ing for  the  incorporation  of  stock  companies  for  business 
and  beneficial  purposes.  A  number  of  the  states  have,  in 
addition  to  this,  made  special  provision  for  the  incorpora- 
tion of  building  associations,  treating  them  as  a  special 
class  of  corporations  with  special  powers  and  disabilities. 
After  the  constitution  has  been  adopted,  or  sometimes 
even  before  this  has  been  done,  articles  of  incorporation 
should  be  prepared  and  forwarded  to  the  proper  author- 
ities for  acceptance  and  record.  Much  care  should  be 
taken  to  secure,  as  incorporators,  the  best  and  most 
influential  persons  available.  A  certain  amount  of  stock 
must  be  subscribed,  usually  ten  per  cent  before  the  associa- 
tion can  be  incorporated. 

There  are  different  methods  of  incorporation  in  the 
different  states.     They  are  known  as  incorporation  by 


*  In  the  Appendix  will  be  found  form  for  Constitution  and  By-Laws. 

[67] 


CHAPTER  VII. 

voluntary  association,  by  special  act  of  the  legislature,  by 
decree  of  court,  and  by  letters  patent  from  the  executive. 
The  drafting  and  securing  of  articles  of  incorporation 
should  be  placed  in  the  hands  of  competent  attorneys. 
Forms  of  incorporation  papers  in  common  use  in  Ohio  are 
given  in  another  place.* 

OFFICERS. 

The  constitution  generally  names  the  officers  of  the 
association  and  the  time  and  method  of  their  election. 
As  soon  as  the  constitution  and  by-laws  have  been  adopted 
it  will  be  necessary  to  complete  the  permanent  organiza- 
tion of  the  association  by  the  election  of  the  prescribed 
officers  according  to  the  method  laid  dov/n  in  the  constitu- 
tion. The  same  care  must  be  exercised  here  as  in  all  other 
steps  incident  to  the  formation  of  an  association.  The 
officers  are  to  occupy  very  responsible  positions  and  should 
be  men  possessing  ability,  integrity,  and  popularity.  Prac- 
tically they  will  have  full  control  of  the  affairs  of  the 
association.  Its  success  will  depend  very  largely  upon  the 
attention  they  give  to  its  business.  The  interests  of  share- 
holders will  be  promoted  or  injured  according  to  the 
degree  of  faithfulness  and  ability  with  which  they  dis- 
charge their  duties. 

HEADQUARTERS. 

Before  an  association  can  go  into  regular  operation,  it 
will  have  to  establish  permanent  headquarters.  These 
should  be  inexpensive,  centrally  located,  convenient,  clean, 


See  Chapter  on  Forms. 

[68] 


HOW  TO  ORGANIZE. 

and  respectable.  Many  an  association  has  failed  to  reach 
its  greatest  degree  of  usefulness  simply  because  it  made  a 
mistake  in  locating  its  headquarters. 

The  headquarters  should  be  fitted  up  inexpensively  but 
conveniently.  There  should  be  desks,  tables,  and  seats 
sufficient  for  the  transaction  of  the  business  of  the  associa- 
tion. Each  association  should  have  a  safe  for  the  proper 
protection  of  its  books,  papers,  and  such  sums  of  money 
as  may  be  temporarily  in  the  hands  of  its  officers.  The 
officers  are  made  responsible  for  the  custody  of  the  prop- 
erty of  the  association,  and  are  compelled  to  give  bonds 
for  its  security.  They  should  be  provided  with  a  safe  place 
of  deposit  for  everything  for  which  they  are  made 
responsible. 

After  the  headquarters  have  once  been  established  it 
should  be  understood  that  they  constitute  the  regular 
business  office  of  the  association,  and  that  all  communica- 
tions, notices,  etc.,  intended  for  the  association  should  be 
addressed  to  these  headquarters,  and  that  they  will,  if  so 
addressed,  receive  prompt  attention.  This  implies,  of 
course,  that  there  shall  always  be  some  one  in,  or  adjacent 
to,  the  headquarters  to  receive  such  communications,  and 
that  the  officers  — the  secretary  particularly  — will  visit 
or  communicate  with  the  one  in  charge  of  the  meeting 
place,  to  give  personal  attention  to  any  business  that  may 
require  it. 

All  members  must  be  notified  promptly  of  any  change 
in  the  place  of  meeting. 

An  attractive  sign  should  be  conspicuously  displayed  at 
the  headquarters,  advertising  the  association.     This  sign 

[69] 


CHAPTER  VII. 

should  give  the  name  of  the  association,  the  number  and 
the  value  of  shares,  the  rate  of  payments  required,  and  the 
dates  and  the  hours  of  the  meetings.  Many  an  associa- 
tion has  received  new  members  through  the  display  of  an 
appropriate  sign.  Directors  should  not  be  over-econom- 
ical in  this  connection.  Money  judiciously  expended  in 
advertising  an  association  will  bring  desirable  returns. 

In  England  the  statutes  require  building  societies  to 
display  signs  in  some  such  form  as  described  above.  On 
these  signs,  and  on  all  the  printed  matter,  the  word 
''Limited"  must  always  follow  the  title  of  the  society. 
This  is  intended  to  show  that  the  liability  of  shareholders 
is  limited  to  their  actual  shares  in  the  society. 

MEETINGS. 

Meetings  should  be  held  generally  in  the  evening,  that 
evening  being  selected  which  is  most  convenient  to  mem- 
bers and  officers.  It  is  well,  if  possible,  to  select  an  evening 
on  which  no  other  association  meets  in  the  vicinity.  Mon- 
day or  Saturday  evening  is  usually  the  best  for  meeting, 
for  workingmen  are  generally  paid  on  those  days  and  like 
to  make  their  weekly  deposits  at  once.  From  October  to 
April  the  hour  for  receiving  dues,  etc.,  may  be  from  7  :30 
to  8  :30  P.  M.,  and  from  April  to  October  from  8  to  9  P. 
M.  After  this  time  the  directors  hold  their  regular  meet- 
ings. But  this  question  should  be  governed  entirely  by 
local  circumstances  and  the  convenience  and  wishes  of 
shareholders. 


[70] 


HOW  TO  ORGANIZE. 

NEW  REGULATIONS. 

The  suggestions  of  this  chapter  are  necessarily  of  a 
general  character.  In  each  state  they  must  be  carried  out 
according  to  the  conditions  established  by  the  existing 
statutes.  So  many  new  laws  are  being  enacted  that 
changes  are  necessary  in  the  details  of  the  organization 
and  work  of  associations  from  time  to  time. 


|7I| 


CHAPTER  VIII. 


Stock  and  Stockholders. 


STOCK  AND  SHARES. 

The  stock  of  a  corporation  is  defined  to  be  "that  money 
or  property  which  is  put  into  a  single  corporate  fund  by 
those  who,  by  subscription  therefor,  become  members  of 
the  corporate  body."  This  common  fund  or  stock  is 
divided  into  equal  parts  called  shares.  The  number  and 
value  of  shares  into  which  stock  is  divided  is  fixed  by  the 
general  statutes  and  by  the  rules  of  the  association.  A 
person  becoming  a  member  of  a  corporation  subscribes  for 
a  certain  number  of  these  shares  and  is  known  as  a  share- 
holder or  stockholder.  This  subscription  binds  him  to  pay 
into  the  common  fund  in  regular  installments  the  sum 
represented  by  all  of  the  shares  for  which  he  has  sub- 
scribed. The  number  of  shares  one  member  may  hold  is 
usually  fixed  by  the  constitution  or  by-laws.  In  some 
states  the  statutes  fix  the  number  of  shares  that  may  be 
held  by  any  one  person  or  corporation.  In  some  instances 
no  limit  is  fixed  to  the  number  of  shares  that  may  be  held, 
but  only  a  specified  number  may  be  voted.  The  minimum 
amount  of  stock  to  be  taken — that  is  to  say,  the  number  of 
shares  for  which  subscriptions  must  be  made  before  an 

[72] 


STOCK  AND  STOCKHOLDERS. 

association  can  begin  operation — is  generally  determined 
by  the  state  laws  and  the  rules  of  the  association. 

INCREASE  OF  STOCK. 

The  maximum  capital  stock  of  an  association  is  fixed 
originally  in  the  articles  of  incorporation  and  by  the 
constitution.  But  in  most  states  it  is  competent  for  the 
association,  by  virtue  of  authority  given  it  for  that  purpose 
in  the  charter,  to  increase  the  stock  within  the  limits 
established  by  the  statute,  and  in  the  manner  required  to 
legalize  such  change.  This  increase  of  stock  should  be 
made  only  when  all  other  stock  is  taken  by  bona  fide  sub- 
scription, since  its  issue  involves  additional  expenses.  An 
increase  of  stock  must  always  be  made  in  strict  accordance 
with  the  legal  provisions,  and  should  therefore  be  under- 
taken only  under  competent  legal  advice.  There  can  be  no 
uniform  rule  laid  down  concerning  increase  of  stock.  All 
depends  upon  the  nature  of  the  association,  the  rules  it 
has  adopted,  and  the  provisions  of  the  statutes  under 
which  it  operates.  In  terminating  associations,  for 
instance,  there  can  be  no  arrangement  for  increase  of  stock 
as  the  term  is  generally  understood. 

STOCK  AS  PROPERTY. 

The  ownership  of  a  share  or  shares  of  stock  in  a  build- 
ing association  does  not  give  the  holder  a  proprietary 
right  in  the  property  of  the  association.  It  simply  gives 
him  the  right  to  share  in  the  surplus  profits  obtained  from 
the  use  and  investment  of  the  revenues  of  the  association. 
The  funds  of  the  association  may  for  instance  be  invested 

[73] 


CHAPTER  VIII. 

exclusively  in  real  estate.  The  shares  are  nevertheless 
merely  personal  property  and  do  not  entitle  the  holder  to 
any  individual  proprietorship  in  the  real  estate  belonging 
to  the  association. 

SHARES  TRANSFERABLE. 

Shares  of  stock  in  a  building  association  may,  like  other 
personal  property,  be  transferred  from  one  owner  to 
another.  The  transfer  is  made  "by  assignment  and  deliv- 
ery." The  method  of  transfer  should  always  be  specified 
in  the  constitution  or  by-laws  of  an  association.  Of  course 
no  transfer  of  stock  can  be  made  when  such  transfer 
trespasses  in  any  way  upon  the  corporate  rights  of  the 
association.  A  member  who  is  in  arrears  cannot  transfer 
his  stock  until  he  makes  settlement  to  date.  On  the  other 
hand  the  association  cannot  resist  such  transfer  where  the 
holder  of  the  stock  has  complied  with  all  the  necessary 
conditions.  Usually  a  fee,  called  the  transfer  fee,  is 
charged  to  the  person  to  whom  a  transfer  is  made.  This 
is  an  equivalent  to  the  admission  fee  charged  to  new 
members. 

STOCK  PAYMENTS  OR  DUES. 

A  member  of  an  association  is  the  holder  of  one  or 
more  of  its  shares  of  stock.  The  par  or  paid-up  value  of  a 
share  is  fixed  in  the  constitution  at  such  amount  as  may 
be  decided  upon,  generally  from  $200  to  $500.  This  par 
value  of  a  share  is  its  expected  value.  Its  actual  value  is 
a  very  different  thing,  especially  during  the  first  years  of 
a  shareholders'  membership.    A  subscriber  for  a  share  of 

[74] 


STOCK  AND  STOCKHOLDERS. 

stock  of  the  par  value  of  $500  has  simply  made  an  agree- 
ment to  pay  into  the  association  a  regular  weekly  or 
monthly  installment  of  a  certain  amount,  which  periodical 
payments  are  to  be  continued  until  the  accumulated  pay- 
ments, together  with  the  accrued  dividends  thereon,  shall 
amount  to  the  sum  stipulated  as  the  full  value  of  the  share. 
These  periodical  installments  are  called  stock-payments, 
or  dues.  It  is  seen,  therefore,  that  the  actual  value  of  a 
share  at  any  time  is  determined  solely  by  the  amount  paid 
in  and  accumulated  up  to  that  date  and  not  at  all  by  its 
face  value.  The  regular  payment  of  these  periodical 
contributions  by  members  is  the  prime  dependence  of  the 
association  for  its  success  as  an  enterprise.  The  constitu- 
tion and  by-laws  of  every  association,  therefore,  must 
prescribe  carefully  the  time  and  manner  of  making  these 
payments,  and  fix  penalties  for  default  of  payment.  This 
subject  is  discussed  further  in  its  appropriate  place  in 
another  chapter.* 

PAID-UP  STOCK. 

In  some  associations  provision  is  made  for  members  to 
pay  in  the  full  maturity  or  par  value  of  their  shares  at 
any  time,  and  a  certificate  of  paid-up  stock  is  then  issued, 
and  owners  thereof  are  entitled  to  receive  in  cash  the 
amount  of  all  dividends  declared  thereon,  subject  to  such 
conditions  or  limitations  as  the  board  of  directors  of  each 
particular  association  may  have  adopted.  In  some 
instances  these  shares  participate  as  fully  in  the  profits  as 
the  regular  installment  shares;  but  in  most  cases  a  fixed 


See  Chapter  IX. 

[75] 


CHAPTER  VIII. 

rate  of  interest  only  is  allowed,  while  the  holders  of  the 
shares  usually  consign  to  the  association  all  rights  to 
profits  above  that  amount.  In  some  cases  the  holders  of 
regular  installment  shares  that  have  arrived  at  maturity 
value,  do  not  desire  to  draw  their  money,  but  prefer  to 
leave  it  with  the  association  as  an  investment.  In  associa- 
tions where  this  practice  is  followed,  the  holders  of 
matured  shares  receive  certificates  for  the  same,  which 
are  usually  governed  by  the  same  conditions  as  are 
attached  to  paid-up  shares. 

It  was  formerly  the  custom,  which  is  still  followed  to 
a  great  extent,  to  pay  off  shares  as  they  matured  in  the 
regular  course  of  the  association.  In  a  terminating  asso- 
ciation this  of  course  must  be  done.  •  In  the  serial  associa- 
tions, where  all  the  stock  of  each  series  matures  at  one 
time,  it  is  necessary  that  there  must  be  a  large  accumula- 
tion of  funds  toward  the  end  of  the  series  to  meet  the 
stock  payments  which  will  then  become  due.  The  disad- 
vantages arising  from  such  a  necessity  are  readily  under- 
stood. In  the  permanent  or  perpetual  associations,  where 
shares  are  maturing  in  small  numbers  from  time  to  time, 
this  large  accumulation  of  funds  to  pay  them  off  is  not  a 
matter  of  so  much  consequence.  The  constant  addition  of 
new  members  supplies  the  necessary  funds  to  meet  the 
withdrawal  of  the  maturing  shares. 

It  is  always  a  question  worth  considering  as  to  whether 
the  funds  should  be  withdrawn  from  the  association  when 
shares  mature.  On  the  one  hand  the  association  may  be 
able  to  use  the  money  to  good  advantage  and  may  be 
crippled  in   its  operations  by   its  withdrawal.    This  is 

[76] 


STOCK  AND  STOCKHOLDERS. 

especially  true  in  the  case  of  a  serial  association,  for  it  is 
necessary  for  the  association  to  hoard  its  money  for  quite  a 
while  in  advance  and  then  to  part  with  the  large  amount 
thus  saved  up.  Of  course  this  must  limit  its  operations. 
On  the  other  hand,  unless  the  owner  of  the  stock  has  some 
specific  use  for  it,  as  in  the  purchase  of  property  or 
paying  off  a  mortgage,  or  something  of  that  nature,  it 
may  be  better  for  him  to  leave  it  invested  in  the  associa- 
tion than  to  draw  it  out.  The  possession  of  so  much 
money  immediately  in  hand  brings  with  it  the  tempta- 
tion to  spend  it  needlessly,  or  to  risk  it  in  some  speculative 
enterprise.  In  the  case  of  a  serial  association  the  placing 
of  so  much  ready  capital  in  the  hands  of  so  many  persons 
whose  stock  has  matured  may  result  in  the  expenditure  of 
a  large  part  of  the  money  which  might  have  been  reserved 
for  better  uses. 

New  features  have  recently  been  introduced  in  some 
associations  in  connection  with  the  issuance  of  paid- 
up  stock  certificates.  Under  the  old  rule  the  certificates 
are  redeemable  only  by  special  action  of  the  board  of 
directors.  The  change  consists  in  the  attachment  of  a 
series  of  coupons  to  the  certificates.  This  plan  is  possible 
in  associations  which  have  an  assured  prospect  of  having 
money  to  sell  or  loan  for  some  time  ahead.  The  coupons 
specify  the  rate  of  interest.  A  copy  of  these  coupons  will 
be  found  in  the  chapter  on  Forms.  The  use  of  the  coupons 
saves  the  secretary  the  trouble  of  issuing  special  vouchers 
for  dividends  on  paid-up  stock.  In  some  cases  these 
coupons  are  accepted  as  cash  for  the  amount  of  dividend. 
It  is  evident  that  it  is  only  under  certain  circumstances 

[77] 


CHAPTER  VIII. 

that  these  features  can  be  adopted  and  followed.  The  rate 
of  guaranteed  dividend  must  be  so  low  as  to  justify  the 
directors  in  adopting  the  plan,  and  there  must  be  some 
positive  assurance  that  it  can  be  continued. 

The  rules  of  an  association  in  reference  to  paid-up  stock 
should  be  most  carefully  drawn  so  as  to  cover  all  con- 
tingencies or  emergencies. 

Any  member  whose  stock  has  matured  should  consider 
very  carefully  as  to  whether  or  not  it  will  be  best  for  him 
to  draw  out  his  money  or  take  a  paid-up  stock  certificate 
and  leave  the  money  in  the  association  as  an  investment. 

OTHER  FACTS  CONCERNING  STOCK. 

Various  other  questions  relating  to  stock  have  been 
determined  by  general  usage  or  passed  upon  by  the  courts. 
Associations  have  the  right  of  lien  upon  shares,  which 
extends  to  all  liabilities  of  shareholders,  for  dues,  fines, 
and  other  lawful  charges.  An  association,  in  extreme 
cases,  may  collect  by  suit  the  dues  of  delinquent  members 
who  are  endeavoring  to  work  injury  to  the  association. 
In  cases  where  the  shareholder  has  borrowed  money  from 
the  association  his  regular  dues  are  not  to  be  credited 
upon  his  loan  but  are  to  be  applied  upon  his  stock  account 
just  as  the  dues  of  any  other  member.  He  may,  however, 
at  any  time  have  his  accumulated  stock-payments  applied 
upon  his  debt;  or,  if  the  association  holds  a  lien  upon 
his  shares  for  security  of  his  indebtedness,  the  associa- 
tion may,  in  case  of  his  default  of  obligations,  apply  his 
accumulated  stock-payments  to  cancel  his  indebtedness 
as  far  as  they  will  reach.    In  such  cases  defaulting  mem- 

[78] 


STOCK  AND  STOCKHOLDERS. 

bers  have  the  benefit  only  of  the  aggregate  of  their  paid- 
up  subscriptions.  But  if  a  member  voluntarily  repays  the 
money  thus  applied,  there  is  added  the  declared  portion 
of  the  profits  of  the  association  up  to  the  time  of  the  repay- 
ment, provided  he  has  not  assigned  his  shares  to  a  third 
party.  An  assignee  or  executor  of  a  member  may  exercise 
the  same  rights  in  the  control  of  stock  as  the  shareholder 
himself.  Stock  may  be  assigned  to  an  association  by  a 
borrowing  member  as  collateral  security  for  his  loan,  and 
it  is  the  usual  practice  of  associations  to  require  this 
assignment.  Where  the  stock  of  a  borrowing  member  is 
assigned  to  an  association  as  collateral  security  and  real 
estate  is  at  the  same  time  mortgaged,  the  liability  falls 
first  upon  the  stock.  If  this  fails  to  extinguish  the 
indebtedness  then  the  real  estate  or  other  collateral  secu- 
rity becomes  liable. 

In  order  that  no  question  may  arise  in  reference  to  any 
of  these  miscellaneous  matters  they  should  all  be  covered 
as  nearly  as  possible  by  explicit  rules  in  the  constitution 
and  by-laws  of  an  association.  The  practice  in  connection 
with  many  features  of  work  is  not  at  all  uniform  in 
associations.  Hence  the  necessity  that  each  association 
carefully  define  in  its  rules  the  course  which  it  will  adopt 
in  connection  with  all  matters  concerning  which  differ- 
ences of  opinion  might  arise  in  the  absence  of  rules 
specially  governing  them. 

CERTIFICATES  OF  DEPOSIT. 

In  a  number  of  the  states  where  special  deposits  are 
received  from  those  who  do  not  care  to  become  members 

[79] 


CHAPTER  VIII. 

of  the  association  and  who  do  not  care  to  assume  any 
liability  as  to  membership,  persons  may  deposit  the  money 
with  the  association  along  the  same  lines  as  it  is  deposited 
in  regular  savings  banks,  trust  companies  and  similar 
institutions.  The  board  of  directors  usually  fixes  a  certain 
rate  of  interest  to  be  paid  thereon,  payable  semi-annually 
or  annually,  as  the  case  may  be,  and  certain  conditions 
relating  to  these  deposits. 

THE  DEPOSIT  FEATURE  IN  ASSOCIATIONS. 

The  amount  of  moneys  that  have  been  received  as 
deposits,  or  special  deposits,  in  some  of  the  states,  has 
grown  to  be  a  large  factor  in  this  work.  Many  of  the 
leaders  of  the  movement  are  opposed  to  accepting  any 
deposits  in  any  of  the  associations.  The  reasons,  they 
claim,  are  that  it  creates  a  preferred  class  in  the  respective 
associations  and  that  the  fundamental  principles  of  the 
work  of  the  building  and  loan  associations  should  be  car- 
ried along  the  lines  of  true  co-operative  effort.  The  many 
exemptions  and  favors  shown  by  legislators  to  this  move- 
ment were  due  to  the  fact  that  these  associations,  being 
strongly  co-operative  in  their  character,  were  entitled  to 
these  special  privileges.  Whether  they  can  continue  to 
secure  favorable  legislation  if  this  practice  is  enlarged  upon 
the  future  alone  can  determine. 


[80] 


CHAPTER  IX. 


Definition  of  Stock  and  Stockholders. 


DIFFERENCE  DEFINED. 

The  difference  between  a  stockholder  in  a  building,  loan 
and  savings  association  and  that  in  an  ordinary  corpora- 
tion, for  usual  business  purposes,  lies  in  the  fact  that  in 
the  latter  the  member  or  stockholder  buys  his  stock  and 
pays  for  it  at  once,  and  usually  is  not  called  upon  for  any 
further  payment.  His  profits,  or  the  results  of  his  invest- 
ments in  such  stock,  are  derived  through  dividends,  the 
value  of  the  shares  depending  upon  the  successful  opera- 
tion of  the  business.  They  often  go  above  par  when  the 
corporation  is  doing  a  profitable  business,  and  the  value 
often  drops  far  below  par  when  disaster  comes.  In  the 
building,  loan  and  savings  association,  on  the  contrary, 
the  stockholder  or  member  pays  a  stipulated  minimum 
sum,  say  $1.00,  when  he  takes  his  membership  and  buys 
a  share  of  stock.  He  then  continues  to  pay  a  small  sum 
each  week  or  month  until  the  aggregate  of  sums  paid, 
augmented  by  the  profits,  amounts  to  the  maturing  value 
of  the  stock,  usually  from  one  to  five  hundred  dollars,  and 
at  this  time  the  stockholder  is  entitled  to  the  full  maturing 
value  of  the  share,  and  surrenders  the  same.  Or  he  may 
receive  a  certificate  of  paid-up  stock,  if  he  chooses  to  leave 

[81] 


CHAPTER  IX. 

the  money  with  the  association.  It  is  clearly  seen  then 
that  the  capital  of  a  building,  loan  and  savings  association 
consists  of  the  combined  savings  of  its  members,  paid  to 
the  association  upon  shares  of  stock,  increased  by  the 
interest  and  premium  which  the  association  has  received 
on  loans  made  by  it  from  the  savings  of  its  members  thus 
paid  to  the  association,  and  from  all  other  sources  of 
income.  The  amount  of  capital  of  the  association,  there- 
fore, increases  from  month  to  month  and  year  to  year. 

SERIAL  ASSOCIATIONS. 

In  the  serial  associations,  shares  are  usually  issued  in 
series.  When  the  second  series  is  issued,  the  issue  of  the 
stock  of  the  prior  series  ceases.  Profits  are  distributed  and 
losses  apportioned  before  a  new  series  is  issued.  The  term 
during  which  a  series  is  opened  for  subscription  differs, 
but  it  usually  extends  for  three  or  six  months,  and  some- 
times a  year.  Prior  to  the  maturing  of  a  share,  it  has  two 
values.  One  is  called  the  holding  or  book  value,  and  the 
other  the  withdrawal  value.  The  former  is  ascertained 
by  adding  all  the  dues  that  have  been  paid  to  the  profits 
that  have  accrued :  that  is  to  say,  the  holding  value  is  Jie 
actual  value  of  a  share  at  any  particular  time.  The  with- 
drawal value  on  the  contrary  is  that  amount  which  an 
association  is  willing  to  pay  to  a  shareholder  who  desires 
to  sever  his  connection  with  the  association  prior  to  the 
date  at  which  his  share  will  mature.  Every  association 
has  full  regulations  prescribed  in  its  constitution  and  by- 
laws on  all  such  matters,  as  well  as  on  matters  pertaining 
to  expenses,  notice  of  withdrawal  and  all  the  methods  and 

[82] 


DEFINITION  OF  STOCK  AND  STOCKHOLDERS. 

processes  necessary  for  the  safe  conduct  of  the  business. 
The  purchase  of  a  share  binds  the  shareholder  to  the 
necessity  of  keeping  up  his  dues  and  thus  secures  to  him 
all  the  benefits  of  his  savings.  This  accomplishes  the  first 
feature  of  the  motive  of  a  building,  loan  and  savings  asso- 
ciation. The  second  is  that  of  enabling  a  person  to  bor- 
row money  for  building  or  other  purposes. 

BORROWING  MEMBERS. 

Ordinarily  a  shareholder  who  desires  to  build  a  house 
and  has  secured  a  lot  for  the  purpose  makes  application 
to  borrow  money  from  the  association  of  which  he  is  a 
member.  Suppose  a  person  who  has  secured  a  lot  wishes 
to  borrow  $1,000  for  the  erection  of  a  home.  He  must  be 
the  holder  of  five  shares  in  the  association,  each  share  hav- 
ing as  its  maturing  value,  say  $200.00.  His  five  shares, 
therefore,  when  matured,  will  be  worth  $1,000,  the 
amount  of  money  which  he  wishes  to  borrow.  The  process 
by  which  he  can  borrow  this  money  differs  from  that  of 
borrowing  money  from  savings,  trust  or  other  financial 
institutions.  In  a  building,  loan  and  savings  association 
the  money  was  formerly  put  up  at  auction,  usually  in  open 
meeting  on  the  night  or  at  the  time  of  the  payment  of  the 
dues.  Those  who  desired  to  borrow,  bid  a  premium  above 
the  regular  rate  of  interest  charged,  and  the  one  bidding 
the  highest  premium  was  awarded  the  loan.  There  has 
been  a  decided  change  in  this  direction.  Today  the  mat- 
ter of  premiums  on  loans  is  being  eliminated  very  rapidly, 
and  the  association  aims  to  furnish  its  borrowers  money 
at  as  low  a  rate  of  interest  as  possible.    The  persons  desir- 

[83] 


CHAPTER  IX. 

ing  to  make  a  loan  now  fill  out  an  application  for  a  loan 
which  is  filed  in  numerical  order,  and  then  taken  up  at  the 
meeting  of  the  board  of  directors.  The  person  who  wishes 
to  build  his  home,  therefore,  and  desires  to  borrow  $1,000, 
must  have  five  shares  of  stock  of  $200.00  each  in  the  asso- 
ciation, and  after  the  directors  have  passed  upon  the  appli- 
cation, the  $1,000  will  be  loaned  to  him,  if  acted  upon 
favorably.  To  secure  this  $1,000  the  person  gives  the 
association  a  mortgage  on  the  property,  and  pledges  his 
five  shares  of  stock.  To  cancel  this  debt  he  is  constantly 
paying  his  monthly,  semi-monthly  or  weekly  dues,  until 
such  time  as  the  payment  of  dues,  plus  the  accumulation 
of  profits,  matures  the  shares  at  $200  each.  At  this  time, 
then,  the  shares  are  surrendered  and  the  debt  on  the  prop- 
erty canceled.  The  question  as  to  whether  this  method  of 
obtaining  money  for  the  building  of  homes  or  for  other 
purposes,  is  more  or  less  economical  from  that  of  obtain- 
ing it  from  the  ordinary  savings  banks,  trust  or  other 
financial  institutions,  has  been  discussed  at  another  place. 

SAFETY  OF  THESE  ASSOCIATIONS. 

It  will  be  seen  at  once  that  the  investment  in  a  building 
loan  and  savings  association  is  as  nearly  absolutely  safe 
as  it  can  be,  for  the  paid-in  dues  and  the  accumulated 
profits,  which  give  the  active  capital  of  the  association, 
are  loaned  as  fast  as  they  accumulate.  They  are  usually 
loaned  immediately  upon  real  estate  or  upon  the  stock  of 
the  association  itself.  The  opportunities  for  embezzling 
or  for  the  shrinking  of  securities  are  reduced  to  the 
minimum,    and   almost   absolute    safety   of   the    invest- 

[84] 


DEFINITION  OF  STOCK  AND  STOCKHOLDERS. 

ment  is  secured.  In  referring  to  the  enormous  amount  of 
money  handled  by  the  building,  loan  and  savings  associa- 
tions of  the  United  States,  the  Hon.  Carroll  D.  Wright, 
Commissioner  of  Labor,  in  his  most  excellent  report, 
published  in  1893,  from  which  extracts  are  given,  states 
the  following : 

"A  business  represented  by  an  annual  income  of,  at  that  time 
stated  $450,667,594,  conducted  quietly  with  little  or  no  advertising 
and,  as  stated,  without  the  experienced  banker  in  charge,  shows  that 
the  common  people  in  their  own  ways  are  quite  competent  to  take 
care  of  their  savings,  especially  when  it  is  known  that  but  35  of  the 
associations  then  in  existence,  showed  a  net  loss  at  the  end  of  their 
last  fiscal  year,  and  that  this  loss  amounted  to  only  $23,332.20.  Of 
course  associations  disband  for  the  want  of  business  or  from  some 
other  cause,  but  when  they  disband,  loss  does  not  occur,  because  the 
whole  business  of  the  association  consists  of  its  loan^s,  and  these 
loans  are  to  its  own  shareholders,  as  a  rule,  who  hold  the  securities 
in  their  associated  forms.  A  disbanded  association,  therefore, 
simply  returns  to  its  own  members  their  own  property." 


[85] 


CHAPTER  X. 


Insurance. 


INSURANCE  FEATURES. 

The  matter  of  various  forms  of  insurance  that  can  be 
successfully  introduced  in  connection  with  this  work  has 
been  given  great  consideration  by  the  leaders  of  the  move- 
ment. When  we  consider  the  line  of  credit  extended  to 
the  wage  earner,  it  is  no  more  than  proper  that  these 
credits  extended  should  be  protected.  To  meet  this 
demand  various  forms  of  insurance  have  been  devised. 

HEALTH,  ACCIDENT  AND  DISABILITY  INSURANCE. 

The  protection  afforded  not  only  to  the  member  but 
to  the  association  is  of  importance.  Prominent  insurance 
companies  have  now  given  this  matter  careful  considera- 
tion, and  have  submitted  propositions  covering  this  idea. 
In  case  a  member  meets  with  an  accident,  or  becomes  sick, 
or  disabled,  these  companies  will  pay  them  a  regular 
indemnity  as  provided  in  their  policies.  In  many  cases 
the  homes  of  borrowers  would  have  been  saved  to  their 
families  had  these  precautions  been  taken.  The  payments 
covering  this  insurance  are  made  payable  at  regular 
stated  intervals,  to  the  secretary  or  some  other  person 
designated  for  this  purpose,  so  that  the  members  are  not 

[86] 


INSURANCE. 

put  to  any  inconvenience  to  keep  up  these  payments.  We 
are  of  the  opinion  that  while  this  may  be  a  difficult  mat- 
ter for  associations  to  adopt  in  a  general  way,  still  this 
idea  could  be  inaugurated  on  all  new  business  that  is  writ- 
ten. In  fact,  when  an  application  for  a  loan  is  made  to 
the  association,  it  is  just  as  proper  to  ask  the  applying 
member  if  he  has  made  these  provisions  as  it  is  to  ask  if 
he  has  a  fire  insurance  on  his  house.  Statistics  have  proven 
that  the  loss  of  homes  through  fire  are  but  a  small  per- 
centage to  that  compared  with  those  who  become  sick  or 
who  meet  with  accidents. 

TORNADO   INSURANCE. 

This  subject  should  be  carefully  taken  into  considera- 
tion by  associations  making  loans  on  property,  as  nearly 
every  month  in  the  year  some  damage  is  caused  to  some 
member  through  the  force  of  windstorms,  cyclones,  tor- 
nadoes, etc.  It,  therefore,  becomes  necessary  for  those 
having  charge  of  the  association's  interests  to  see  that 
each  borrower  has  his  property  protected  by  a  proper 
tornado  policy  in  some  responsible  company. 

LIFE  INSURANCE. 

For  the  purposes  of  investment  and  as  a  security  for 
loans,  some  of  the  associations  issue  in  connection  there- 
with, so-called  life,  protected  or  endowment  stock.  This 
stock  is  issued  for  the  benefit  of  such  members  as  may 
desire  to  protect  their  investments  from  the  consequences 
of  death  before  the  maturity  of  their  stock,  and  especially 
for  the  benefit  of  borrowing  members.     Arrangements 

[87] 


CHAPTER  X. 

are  made  by  such  associations  with  a  responsible  life 
insurance  company  in  which  the  latter  guarantees  the 
payment  of  life  insurance  in  case  of  death  for  the  full  face 
value  of  endowment  stock,  held  by  the  member  at  the  time 
of  his  death.  Members  who  wish  to  avail  themselves  of 
such  advantages  must  submit  to  the  usual  medical  exam- 
ination. In  addition  to  their  regular  dues,  they  are 
required  to  pay  an  insurance  premium  graduated  accord- 
ing to  age.  At  the  1909  convention  of  the  United  States 
League,  Dr.  Pranard,  of  Paris,  France,  had  the  following 
interesting  suggestion  to  make  along  these  lines: 

"I  speak  of  insurance  in  building  associations.  I  expressed,  in  the 
conclusion  of  my  book  on  'American  Building  Associations/  the  hope 
of  seeing  American  people  adhere  to  the  plan  of  life  insurance  policy 
as  an  additional  security.  All  the  ideas  expressed  by  Mr.  Brackett  I 
support  strongely,  and  am  pleased  to  state  that  they  are  emphasized 
upon  by  Belgian  and  French  specialists.  Nothing  more  can  be  said 
after  Mr.  Brackett's  remarks  about  the  advantages  of  the  plan,  both 
for  the  society  and  for  the  borrower  himself  and  his  family.  But 
I  should  like  to  tell,  in  a  few  words,  the  difficulties  it  encounters,  and 
how,  according  to  the  Belgian  practice,  they  are  met  with. 

"The  system  prevailing  amongst  us  is  that  of  the  so-called  'reduc- 
ing term  policy,'  under  which  'the  amount  of  the  insurance  is  reduce(^ 
each  year,  as  the  amount  required  for  a  discharge  of  the  mortgage 
of  the  borrower  is  reduced  by  his  monthly  payments,  his  premiums 
heing  each  year  correspondingly  reduced. 

"From  this  excellent  definition  of  the  plan  it  follows  that  the 
premium  of  the  first  year,  destined  to  face  the  most  important  risk, 
is  the  highest,  and  the  premiums  of  the  subsequent  years  decrease 
with  the  risk  till  the  mortgage  is  paid  off. 

"There  are  three  ways  of  paying  premiums :  1st,  yearly,  and  then 
the  amount  of  the  premiums  decreases  with  the  risk;  2d,  in  gross, 
at  first,  for  the  whole  time  of  the  contract;  3d,  by  yearly  equal 
installments  whose  amount  is  determined  by  the  premium  of  the  first 
year,  and  which,  consequently,  are  paid  during  a  part  of  the  insurance 
period  only. 

[88] 


INSURANCE. 

"The  three  systems  present  the  same  inconveniences;  they  neces- 
sitate, at  the  beginning,  the  greatest  sacrifices  from  the  borrower. 
The  desirable  solution  would  be  th€  averaging  of  the  premiums  on 
the  basis  of  the  premium  paid  in  the  middle  of  the  period ;  but  such 
a  solution  is  not  possible  for  the  insurance  company,  for  the  com- 
pany would  receive,  during  the  first  half  of  the  contract,  less  than  the 
price  of  the  risk ;  there  would  be  what  is  called  a  'negative  reserve.* 

"The  difficulty  is  happily  solved  by  the  interference  of  the  build- 
ing society.  The  society  advances  the  amount  of  the  premium  to 
the  borrowers  and  incorporates  it  in  the  loan,  combining  the  annuities 
so  that  they  are  equal;  the  portion  representing  the  paying  off  is, 
during  the  first  years,  less  important,  while  the  portion  of  the  insur- 
ance is  higher ;  but  the  first  one  goes  on  increasing  as  the  second 
one  is  diminishing.  With  this  interference  all  interests  are  safe- 
guarded ;  the  insurance  company  receives  the  premium  as  is  required 
for  its  security,  and  the  borrower  pays  in,  quarterly  or  monthly,  the 
same  averaged  amount  as  long  as  his  mortgage  is  not  discharged." 


[89] 


CHAPTER  XL 


Duties  and  Rights  of  Members, 


MEMBERSHIP. 

Membership  in  a  building  association  is  acquired  by 
becoming  a  holder  of  its  stock.  All  persons  or  corpora- 
tions legally  capable  of  making  contracts  may  become 
members  of  an  association.  In  some  states,  by  special 
legislation,  membership  is  permitted  to  minors  and  mar- 
ried women,  who  under  the  general  law  in  those  states 
would  be  debarred.  As  a  rule  one  association,  however, 
may  not  become  a  member  in  another. 

There  are  two  classes  of  members — depositors  and  bor- 
rowers. Generally  the  membership  is  sought  for  the 
purpose  of  making  a  safe  deposit  of  the  small  surplus 
earnings  of  persons,  who  otherwise  would  have  to  keep 
this  surplus  at  home  where  it  is  unsafe  and  liable  to  be 
expended.  These  are  called  depositing  members.  A  person 
may  likewise  become  a  member  for  the  purpose  of  obtain- 
ing a  loan,  and  is  called  a  borrowing  member. 

Every  subscriber  for  stock  should  pay  a  specified  admis- 
sion fee  and  also  purchase  a  pass-book.  Dues  on  stock 
begin  from  the  time  of  subscription.  In  associations  as 
now  conducted  on  the  permanent  plan,  payment  of  back 
dues  is  not  required,  all  stock  dating  from  day  of  actual 

[90] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

issue.  But  dues  may  be  paid  in  advance,  in  part  or  in  full. 
When  paid  in  advance  in  part  in  some  associations  they 
draw  dividends.  When  paid  in  advance  in  full,  certificates 
of  paid-up  stock  should  be  issued. 

A  pass-book  is  prima  facie,  and  generally,  sufficient, 
evidence  of  membership.  An  association  cannot  deny 
membership  to  any  person  from  whom  it  continues  to 
accept  dues.  A  person  who,  as  a  member,  receives  the 
benefits  arising  from  membership,  is  estopped  from 
denying  his  membership.  Membership  is  terminated  by 
the  death  of  a  member,  by  a  transfer  of  shares,  by  for- 
feiture, by  voluntary  withdrawal,  by  the  dissolution  of 
the  association,  or  by  the  expiration  of  the  series  in  which 
the  member's  stock  stands.  Where  a  member  becomes  a 
borrower,  his  membership  may  cease  by  special  contract 
with  the  association. 

DUTIES  OP  MEMBERS. 

A  person  who  becomes  a  subscriber  for  the  stock  of  a 
building  association  thereby  enters  into  a  contract  with 
the  association,  all  the  terms  of  which  he  is  legally  bound 
to  fulfill.  Moreover,  by  subscribing  to  the  constitution 
and  by-laws,  or,  indeed,  even  if  this  formality  be  omitted, 
he,  as  a  shareholder,  must  give  his  obedience  to  the  rule* 
of  the  association.  A  member  must  pay  his  dues,  unless 
he  becomes  unable  to  do  so,  when  he  should  give  proper 
notice  of  withdrawal.  A  member  should  give  the  associa- 
tion his  personal  services  to  a  reasonable  extent  by  attend- 
ance upon  the  meetings  and  by  the  faithful  discharge  of 
the  functions  of  such  offices  as  he  may  be  elected  or 

[91] 


CHAPTER  XL 

appointed  to  fill.  Each  member  of  an  association  must 
bear  his  proportionate  share  of  its  expenses.  In  case  of  loss 
he  must  also  share  in  this.  A  member  of  an  association 
cannot  withdraw  in  order  to  evade  his  liability  for 
expenses  and  losses.  His  liability  to  contribute  to  the 
expenses  ceases  only  with  his  membership. 

FINES  AND  FORFEITURES. 

There  has  been  a  great  change  of  ideas  relative  to  the 
fines  and  forfeitures  to  be  imposed  on  the  members  of  the 
associations.  In  fact,  this  item  is  gradually  disappearing 
from  the  reports  of  well  regulated  associations.  It  has 
been  customary  to  insert  into  the  constitution  and  by-laws 
provisions  relative  to  the  imposition  of  these  fines.  Direc- 
tors of  associations  generally  possess  discretionary  powers 
in  regard  to  the  remission  of  fines.  It  is  thought  best  to 
have  these,  so  that  if  a  borrowing  member  becomes 
delinquent,  these  fines  may  be  imposed  so  as  to  provide  for 
the  associations  a  revenue  in  case  they  are  compelled  to 
foreclose.  The  delinquent  member  is  thus  made  to  share 
the  expense  occasioned  by  legal  action. 

To  the  fair-minded  director  a  fine  often  suggests  some- 
thing of  injustice  or  inequity.  While  it  represents  a  source 
of  profit  to  the  association,  it  may  add  to  the  burden  of  an 
already  overburdened  member.  The  delinquency  may 
arise,  indeed,  through  some  misfortune  which  will  appeal 
strongly  to  the  sympathies  of  the  officers  and  other  mem- 
bers. At  such  a  time  of  adversity  the  addition  of  these 
fines  serves  to  build  up  a  barrier  between  the  member  of 
the  association  and  the  organization  itself,  and  to  defeat 
the  delinquent's  only  hope  of  escape. 

[92] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

On  this  account  it  has  been  deemed  advisable  to  discard 
the  whole  system  of  fines.  All  will  agree  that  the  imposi- 
tion of  extortionate  fines  is  an  evil.  Directors  should  be 
given  discretion  in  regard  to  the  remission  of  fines,  and 
should  inquire  carefully  into  the  circumstances  of  delin- 
quents and  always  remit  a  fine  when  it  seems  to  them  just 
and  right  so  to  do.  If  the  member  is  a  borrower  and  has 
become  a  delinquent  through  misfortune  or  causes  for 
which  he  is  not  responsible, his  caseshouldbe  inquired  into 
carefully,  and  he  should  be  aided  in  any  way  possible  by 
the  association.  In  such  cases  the  directors  frequently 
permit  borrowers  to  pay  interest  only  for  a  specified  time. 
This  is  only  a  part  of  the  spirit  of  co-operation  and  mutual 
interest,  upon  which  such  societies  are  founded.  Such 
care  and  leniency  on  the  part  of  directors  may  go  far 
towards  popularizing  an  association  and  thus  add  to  its 
prosperity  and  usefulness. 

Of  course,  what  is  said  above  does  not  apply  to  cases 
of  mere  negligence  or  carelessness.  Such  a  shareholder 
should  be  stirred  up  to  a  sense  of  his  duty  by  a  prompt  fine. 
But  delinquencies  on  account  of  carelessness  are  not  likely 
to  be  continued  for  any  great  period  of  time,  as  a  month 
or  three  months.  When  a  shareholder  continues  delin- 
quent for  such  a  period  there  should  be  an  inquiry  into  the 
circumstances  and  a  just  disposition  of  the  matter  made. 

In  drafting  the  rules  of  an  association  too  much  care 
cannot  be  exercised  in  order  that  they  may  be  not  only 
legal  but  equitable.  The  constitution  and  by-laws  should 
be  so  explicit  and  unequivocal  that  every  member  may 
understand  the  obligations  he  takes  upon  himself  and  the 

[93] 


CHAPTER  XL 

penalties  to  which  he  lays  himself  liable  when  he  becomes 
a  stockholder. 

Directors  should  also  have  the  right  to  demand  and 
enforce  the  resignation  of  a  member  for  any  gross 
impropriety  of  conduct  which  would  make  his  further 
connection  with  the  association  unwise  or  undesirable. 

RIGHTS  OF  MEMBERS. 

Members  may  occupy  three  relations  toward  an  associa- 
tion. Certain  rights  are  vested  in  them  as  members  of 
the  corporation,  or  corporators.  When  a  member  is  an 
investor  only  in  the  association,  he  is  possessed  of  certain 
special  rights;  and  in  like  manner  if  a  member  becomes 
a  borrower  he  secures  certain  other  special  rights. 

CORPORATE  RIGHTS  OF  MEMBERS. 

Every  stockholder  has  the  right  to  attend  all  the  cor- 
porate meetings  of  the  association,  whether  they  be  the 
regular  annual  or  semi-annual  meetings,  or  special  meet- 
ings called  for  some  particular  purpose.  He  has  the  right 
to  be  duly  notified  of  the  time  and  place  of  all  meetings 
and  to  take  part  in  their  proceedings.  In  some  states  and 
in  some  associations  a  member  has  but  one  vote  whatever 
number  of  shares  he  may  hold.  In  other  associations  he 
has  one  vote  for  each  share  he  holds.  In  still  others,  in 
the  election  of  officers  he  casts  one  vote  for  each  share  he 
holds,  while  on  matters  of  general  business  he  has  but  one 
vote.  In  Ohio  the  law  now  provides  that  a  member  can 
hold  as  many  shares  as  he  desires,  but  may  not  vote  but 
twenty.      These    qualifications    should    be    clearly    and 

[94] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

definitely  stated  in  the  constitution.  The  constitution 
should  also  declare  plainly  for  or  against  the  right  of  a 
member  to  be  represented  and  to  vote  by  proxy,  and  if  the 
right  is  allowed,  should  define  the  mode  in  which  it  shall 
be  exercised.  In  some  states  this  matter  is  determined  by 
the  statutes. 

A  member  has  the  right  to  have  access  to  the  books  of 
the  association  at  such  times  and  to  such  extent  as  will 
not  interfere  with  the  business  of  the  association  and  the 
work  of  its  officers.  Owing  to  the  inconvenience,  confu- 
sion and  annoyance  which  may  arise  from  a  large  number 
of  members  having  frequent  access  to  the  books  in  their 
efforts  to  examine  them  intelligently,  it  is  well  for  mem- 
bers to  forego  this  privilege  as  far  as  possible,  and  to  refer 
all  matters  requiring  examination  to  the  auditing  com- 
mittee, or  other  authority  empowered  to  examine  into  and 
to  report  upon  the  business  of  the  association.  A  mem- 
ber has  the  right  to  hold  office  if  elected  or  appointed  in 
the  prescribed  form.  A  member  may  bring  suit  against 
an  association  upon  the  same  conditions  upon  which  a 
person  not  a  member  could  bring  suit.  A  member  may, 
in  behalf  of  himself  and  his  fellow-members,  institute  legal 
proceedings  against  unfaithful  officers  to  compel  lawful 
action  on  their  part  or  to  restrain  them  from  unlawful 
action.  This  right  should,  of  course,  never  be  used 
except  when  such  action  is  based  upon  the  most  convinc- 
ing evidence.  Under  certain  circumstances  a  member 
may  bring  action  in  court  to  have  an  association  dissolved. 
At  the  termination  of  an  association  each  member  has  the 
right  to  his  equitable  share  of  the  profits. 

[95] 


CHAPTER  XL 

RIGHTS  AS  INVESTORS. 

A  person  who  invests  his  money  in  the  stock  of  a  build- 
ing association  has  a  right  to  share  in  the  profits  of  the 
undertaking  in  such  way  as  is  provided  by  the  statutes 
and  the  rules  under  which  it  operates.  He  also  has  the 
right  to  withdraw  his  funds  and  membership  at  such  times 
as  suit  his  convenience.  But  the  chief  and  most  important 
privilege  of  a  shareholder  or  investor  is  that  of  receiving 
loans  or  advances  from  the  association.  It  is  this  privilege 
which  makes  membership  in  an  association  attractive  and 
popular  among  that  class  of  persons  for  whose  benefit 
building  associations  are  organized  and  are  fostered  by 
appropriate  legislation. 

DIVIDENDS. 

The  statutes  as  a  rule  authorize  associations  to  declare 
and  pay  dividends  out  of  the  profits  of  their  business, 
annually  or  otherwise.  These  profits  are  calculated  at  the 
termination  of  each  fiscal  year  or  half-year.  The  profits, 
when  declared,  are  distributed  among  the  members  pro 
rata,  according  to  the  amount  standing  to  the  credit  of 
each  member  at  the  beginning  of  the  term,  and  to  the 
amount  each  has  paid  in  during  the  term,  and  to  the 
length  of  time  it  has  been  in.  The  rules  and  practice  in 
reference  to  dividends  vary  in  different  associations.  On 
this  account  it  is  not  possible  to  lay  down  general  rules 
governing  this  matter.  The  rules  of  every  association 
should  be  explicit  in  reference  to  the  matter  of  dividends, 
for  profit-sharing  is  one  of  the  main  features  which  recom- 
mend associations  to  popular  favor.    The  rules  must  be 

[96] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

so  drawn  that  each  member  shall  share  equitably  in  the 
profits.  In  the  organization  of  a  new  association  the  plan 
upon  which  it  shall  operate  in  reference  to  dividends 
should  be  carefully  considered,  for  this  may  have  much  to 
do  with  its  prosperity  and  success. 

RIGHT  OP  WITHDRAWAL. 

A  member  who  is  simply  an  investor  and  not  a  bor- 
rower has  the  right  to  withdraw  from  an  association  with- 
out being  subject  to  a  forfeiture  of  the  money  already 
paid  in.  For  the  protection  of  the  business  of  the  associa- 
tion this  right  must  be  exercised  under  proper  restrictions. 
The  rules  of  every  association  should  prescribe  in  detail 
the  method  of  withdrawal.  Usually  a  member  is  required 
to  give  formal  notice  in  writing  to  the  secretary  of  his 
intention  to  withdraw.  This  notice  should  be  entered  in  a 
book  kept  for  this  purpose,  and  the  attention  of  the  direc- 
tors should  immediately  be  called  to  it.  In  Massachusetts, 
associations  are  compelled  by  statute  to  keep  a  book  for 
the  special  purpose  of  recording  notices  of  withdrawal, 
which  is  called  the  "Withdrawal  Book."  Members  desir- 
ing to  withdraw  enter  their  notices  in  this  book  in  regular 
order,  including  the  date  of  entry.  The  applications  for 
withdrawal  are  then  acted  upon  in  regular  order.  Direc- 
tors should  be  required  to  set  aside  from  time  to  time  a 
fund  to  be  held  for  the  accommodation  of  members  desir- 
ing to  withdraw. 

While  the  primary  idea  of  the  building  and  loan  asso- 
ciation, as  already  stated  and  popularly  understood,  is  to 
enable  members  to  become  owners  of  homes,  yet  it  is  not 

[97] 


CHAPTER  XI. 

the  province  of  an  association  to  inquire  into  the  purpose 
for  which  a  member  desires  to  accumulate  money.  A 
member  may  therefore  use  an  association  not  only  for  the 
purpose  of  securing  a  home,  but  as  he  would  a  savings 
bank  for  a  variety  of  purposes.  He  may  desire,  (1)  to 
accumulate  a  fund  for  the  purpose  of  embarking  in  some 
business  enterprise,  or,  (2)  for  the  purpose  of  meeting 
some  approaching  obligation,  or,  (3)  simply  of  securing 
a  safe  depositary  for  his  funds,  or,  (4)  of  securing  a 
good  rate  of  interest  on  his  funds  while  deposited.  It 
would  defeat  the  purposes  of  some  of  the  members  if 
there  were  no  proper  provisions  made  for  the  withdrawal 
of  their  money  and  membership  at  such  times  as  suit  their 
plans  and  convenience.  Hence  it  is  that  provision  for 
withdrawals  must  be  made  in  the  rules  of  associations. 

The  question  has  been  debated  as  to  what  share  in  the 
profits  of  an  association  a  withdrawing  member  is  entitled. 
It  has  been  held  in  some  cases  by  the  courts  that  a  with- 
drawing member  does  not  possess  the  right  to  claim  a 
share  of  the  undeclared  profits  of  an  association.  Such 
member  receives  the  amount  he  has  paid  in  and  his  share 
of  the  profits  credited  and  undrawn  at  the  time  of  the  last 
preceding  declaration  of  dividends,  after  there  has  been 
deducted  from  this  total  amount  any  fines  or  other  charges 
still  owing  by  him.  If  the  association  has  suffered  a  loss, 
it  is  the  rule  to  deduct  from  the  amount  which  a  with- 
drawing member  has  paid  in,  an  equitable  portion  as  the 
directors  may  deem  necessary  for  the  protection  of  the 
remaining  shareholders.  In  the  case  of  a  prospective  loss, 
the  settlement  of  which  may  be  in  the  hands  of  an  arbitra- 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

tor  or  receiver,  or  may  be  pending  in  court,  it  is  usual  to 
withhold  some  portion  of  a  withdrawing  member's  money 
until  adjudication,  when  he  is  entitled  to  receive  any  and 
all  residues  of  such  money  withheld,  which  equitably 
belong  to  him. 

A  member's  privileges  in  the  association  cease  as  soon 
as  he  gives  notice  in  proper  form  of  his  intention  to  with- 
draw. After  that  time  he  cannot  transfer  his  stock.  A 
withdrawing  member  is  a  creditor  of  the  association  until 
his  money  is  paid  him.  As  such  he  may  bring  action  to 
collect  the  amount  due  if  the  association  does  not  pay  him 
in  his  turn  and  when  the  money  is  in  the  treasury. 

The  rules  of  an  association  should  confer  some  discre- 
tionary power  upon  the  directors  in  reference  to  with- 
drawals to  be  exercised  in  certain  classes  of  cases. 

RIGHTS  OF  BORROWERS. 

As  already  explained  the  primary  purpose  of  a  building 
and  loan  association  is  to  loan  money  to  its  members.  It 
follows,  therefore,  that  every  member  of  an  association 
who  complies  with  its  rules  has  a  right  to  become  a  bor- 
rower from  it.  The  amount  of  money  which  a  member 
is  entitled  to  borrow  is  usually  regulated  by  the  constitu- 
tion of  the  association. 

A  member  who  is  a  borrower  from  an  association,  even 
.though  in  addition  to  other  security  he  pledges  his  stock 
as  security  for  the  loan,  continues  a  member  in  every  sense 
and  must  discharge  all  the  duties  and  may  enjoy  all  the 
rights  and  privileges  of  his  original  membership  except 
the  right  of  withdrawal  and  such  other  rights  as  may  be 
abridged  by  the  special  provisions  in  the  contract  for  the 

[99] 


CHAPTER  XL 

loan.  A  borrower  has  the  right  at  such  times  as  are  stated 
in  the  rules  to  return  to  the  association,  in  the  aggregate, 
the  sum  of  money  for  the  payment  of  which  in  installments 
his  obligation  calls.  This  must,  of  course,  include  accrued 
interest  and  other  lawful  charges.  He  can  in  this  way,  by 
complying  with  the  constitutional  provisions  and  restric- 
tions governing  such  matters,  release  his  stock,  or  redeem 
property  which  he  may  have  mortgaged  to  the  associa- 
tion. After  such  repayment  the  stockholder  continues  his 
membership  upon  the  original  conditions  and  may  now 
exercise  the  right  of  withdrawal.  The  exact  amount  of 
money  to  be  paid  by  a  borrower  in  the  aggregate  to  dis- 
charge his  obligation  must  be  determined  by  the  rules, 
and  settlement  should  be  made  from  the  books  of  the 
association.  This  is  another  matter  which  should  be  care- 
fully guarded  and  provided  for  in  the  rules  and  the  con- 
tracts, since  it  has  been  a  prolific  cause  of  litigation. 

The  executor  or  administrator  of  the  estate  of  a 
deceased  member  may  continue  the  membership  if  he 
complies  with  the  necessary  conditions  and  regulations. 
But  if  he  does  not  find  it  possible  or  desirable  to  do  this, 
it  has  been  held  that  the  estate  is  entitled  to  the  same 
privileges  and  allowances  as  if  the  borrower  had  vol- 
untarily paid  off  the  loan.  A  borrowing  member  who 
does  not  keep  up  his  payments  is  not  entitled  to  the  benefits 
received  by  those  who  meet  their  obligations.  His  only 
offset  against  the  claims  of  the  association  is  the  actual 
payments  he  has  already  made  in  the  way  of  regular  dues 
and  of  interest  upon  his  loans.  Such  members  are  also 
liable  for  their  proportionate  share  of  the  expenses  and 

[100] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

losses  of  the  association.  A  borrowing  member,  when 
sued  by  the  association,  does  not  forfeit  his  rights  of 
membership,  and  is  still  liable  for  his  regular  dues.  An 
association  must,  even  after  suit  is  brought,  accept  the 
payment  of  a  loan  with  accrued  interest  and  costs  and 
other  lawful  charges  if  tendered.  Such  offer  is  regarded 
as  a  legal  tender.  If  the  offer  is  rejected  the  borrower 
is  entitled  to  cease  paying  interest  upon  his  debt  and  to 
the  remedy  of  an  adjudication  by  court. 

DUTIES  OP  BORROWERS. 

The  duties  of  a  borrower  are  sufficiently  indicated  in 
the  preceding  sections.  He  must  not  only  keep  up  his 
original  obligations  as  a  member  but  must  meet  his  con- 
tracts for  the  payment  of  premiums  and  interest  and  must 
look  after  the  character  and  sufficiency  of  his  security. 
Not  only  is  his  own  welfare  and  good  name  dependent 
upon  his  faithfulness,  but  the  prosperity  of  the  association 
and  the  interests  of  his  fellow-members  are  involved  also 
in  his  obligation.  All  of  these  things  put  a  heavy  respon- 
sibility upon  the  borrower,  which  by  every  honorable  con- 
sideration he  must  faithfully  discharge. 


[101] 


CHAPTER  XII. 


Loans  and  Securities, 


PREMIUMS. 

A  PREMIUM  is  a  bonus  which  a  borrowing  member 
agrees  to  pay  for  the  privilege  of  having  money  advanced 
to  him.  It  is,  in  effect,  the  difference  between  the  par 
value  of  his  stock  and  the  actual  amount  advanced  to  him. 
It  represents  the  amount  he  is  willing  to  sacrifice  in  order 
to  anticipate  the  ultimate  value  of  his  stock  by  obtaining 
the  immediate  use  of  the  money  which  the  stock  will  be 
worth  to  him  at  winding  up. 

The  meaning  of  the  term,  premium,  may  perhaps  be 
better  understood  if  the  process  in  the  sale  of  money  is 
reversed.  Let  us  suppose  that  when  an  association  has 
accumulated  a  sum  of  money  which  is  to  be  loaned  to 
members,  instead  of  the  announcement  of  a  sale  of  money 
to  the  highest  bidder,  the  announcement  be  that  the  asso- 
ciation will  purchase  shares  of  members  at  the  lowest 
offer.  A  member  has,  say  five  shares,  which  will  be  worth 
at  maturity  $500  each,  or  a  total  of  $2,500.  On  these 
shares  he  has  agreed  to  pay  his  regular  weekly  installments 
until  they  are  paid  up.  He  now  offers  to  sell  the  prospec- 
tive value  of  these  share  to  the  association  for  a  certain  net 
sum  of  money,  the  shares  to  be  assigned  to  the  associa- 

[102] 


LOANS  AND  SECURITIES. 

tion  immediately  and  a  note  or  bond  be  given  for  the 
continued  regular  payment  of  the  weekly  dues,  this  obliga- 
tion to  be  secured  by  a  mortgage  on  the  real  estate  pur- 
chased with  the  money  advanced,  or  on  other  real  estate,  or 
by  some  other  satisfactory  security.  The  difference  between 
the  par  value  of  the  member's  stock  at  the  maturity  and 
the  net  amount  he  receives  for  it  when  thus  sold  to  the 
association  again  represents  the  premium  which  he  pays 
for  the  immediate  use  of  the  money  thus  secured. 

It  has  been  held  by  the  courts  that  boards  of  directors 
cannot  establish  fixed  rates  of  premium. 

The  custom  of  charging  premiums  for  loans  is  fast 
disappearing  in  the  administration  of  the  associations  of 
the  United  States.  This  is  in  line  with  the  objects  of  the 
work  of  these  co-operative  institutions — to  furnish  money 
to  the  borrowers  at  as  low  a  rate  of  interest  as  is  consistent 
with  their  own  welfare. 

NATURE  OF  A  LOAN. 

The  loaning  or  advancement  of  money  to  members  is 
one  of  the  peculiar  and  distinguishing  functions  of  build- 
ing and  loan  associations.  This  advancement  of  loans  can 
be  made  to  members,  and  should  so  fully  describe  the 
methods  of  procedure  that  mistakes  may  be  avoided. 

In  making  or  carrying  into  effect  the  rules  relating  to 
the  loaning  of  money  to  stockholders,  it  should  be  borne 
in  mind  that  the  borrower  continues  an  active  member  of 
the  association  and,  as  a  partner  in  its  affairs,  is  interested 
in  the  enforcement  of  the  contract  against  himself  as  a 
borrower,  and  that,  in  a  contract  between  an  association 

[103] 


CHAPTER  XII. 

and  a  borrowing  member,  whatever  goes  outside  of  the 
statutory  and  constitutional  provisions  is  invahd. 

MORTGAGES. 

The  ordinary  security  given  by  a  member  for  loans  and 
advancements  made  to  him  is  in  the  form  of  a  mortgage 
upon  real  or  leasehold  estate  which  he  already  holds  or 
which  he  purchases  with  the  money  advanced  to  him.  The 
taking  of  these  mortgages  is  one  of  the  most  common 
incidents  in  the  work  of  an  association  in  fulfilling  the 
functions  for  which  it  is  established.  A  member  may  give 
a  mortgage  upon  freehold  or  leasehold  property  for  which 
he  can  show  a  clear  legal  title.  He  may  give  a  mortgage 
upon  the  real  estate  of  another  person  who  in  due  form 
submits  his  property  for  this  purpose.  Mortgages  must  be 
drawn  directly  in  accordance  with  the  statutes  under 
which  an  association  operates  and  with  its  own  constitu- 
tion and  rules.  Since  the  statutes  under  which  associa- 
tions are  established  differ  in  the  several  states,  and  since 
constitutions  and  rules  governing  this  matter  vary  in  dif- 
ferent associations,  there  are  many  forms  of  mortgages  in 
use.  To  enter  into  a  full  discussion  of  these  forms  would 
be  foreign  to  the  purpose  of  this  work.  Two  forms  in 
common  use  are  printed  in  another  part  of  this  book,*  an 
examination  of  which  will  assist  in  arranging  for  this 
feature  of  the  work  of  an  association.  It  is  sufficient  to 
insist  here  that  the  rules  be  so  carefully  drawn  in  reference 
to  this  subject  that  mistakes  will  not  be  possible.  The 
mortgage  itself  should  contain  the  terms  and  conditions 


See  Chapter  on  Forms. 

[104] 


LOANS  AND  SECURITIES. 

upon  which  it  shall  be  foreclosed,  and  should  specify  the 
disposition  to  be  made  of  the  funds  realized  from  the  sale 
of  the  property.  In  case  of  foreclosure,  where  the  sum 
realized  is  insufficient  to  liquidate  the  entire  amount  of 
the  debt,  the  member  is  still  liable  for  the  balance. 

OTHER  SECURITIES. 

Money  may  be  advanced  to  members  upon  national, 
state,  county,  or  city  bonds  as  collateral  security,  when 
such  action  is  authorized  by  the  statutes  and  the  rules. 
The  acceptance  of  such  collateral  securities  is  in  the  dis- 
cretion of  the  directors.  The  borrower  must  give  his  note 
for  the  amount  received  and  the  interest  to  be  paid  there- 
on, and  transfer  his  stock  to  the  association.  The  note 
should  give  the  name,  number,  amount,  and  par  value,  of 
the  bond  or  bonds  given  as  collateral  security,  and  should 
name  the  conditions  upon  which  the  security  becomes 
forfeited  to  the  association.  Forfeitures  usually  become 
operative  if  the  borrower  shall  fail  to  pay  up  his  regular 
dues  and  the  interest  for  a  certain  term,  say  three  months, 
at  most  not  longer  than  six  months.  The  directors  may, 
after  notifying  him,  declare  his  security  forfeited  and  may 
proceed  to  dispose  of  the  bonds  in  the  most  profitable  man- 
ner for  the  purpose  of  liquidating  his  obligation.  The  bor- 
rower may  be  allowed  to  renew  his  note  from  time  to  time 
at  the  discretion  of  the  directors. 

ASSIGNMENT  OF  STOCK. 

When  a  member's  stock  is  assigned  to  an  association 
as  collateral  security  for  a  loan  the  assignment  is  usually 
required  to  be  made  in  absolute  form.    But  nevertheless 

[105] 


CHAPTER  XII. 

the  association  cannot  use  or  dispose  of  the  stock  except 
for  the  purpose  for  which  the  assignment  is  made.  The 
stock  is  to  be  held  by  the  association  until  it  is  paid  up  by 
the  member.  The  association  then  cancels  the  stock  and 
returns  to  the  member  his  bond.  But  if  the  member  fails 
to  keep  up  his  payments  on  the  assigned  stock,  the  associa- 
tion may  declare  the  stock  forfeited,  and  apply  what  he 
has  already  paid  in  toward  the  liquidation  of  his  debt,  and 
may  transfer  the  shares  to  some  new  applicant  or 
applicants  for  membership.  In  case  of  delinquency  on  the 
part  of  a  borrower  who  has  assigned  his  stock  to  the  asso- 
ciation as  collateral  security,  the  association  first  avails 
itself  of  the  amount  he  has  paid  in  on  the  stock,  and  then 
proceeds  in  an  effort  to  realize  the  balance  of  his  debt  froni 
the  sale  of  his  mortgaged  property  and  any  bonds  or  other 
collateral  security  he  may  have  furnished. 

SALE  OF  SECURITIES;   DISPOSITION  OF  PROCEEDS. 

Directors  of  associations  are  bound  to  dispose  of  prop- 
erty on  foreclosure  of  mortgages  or  of  forfeited  securities 
on  the  most  advantageous  terms.  This  is  necessary  both 
for  the  protection  of  the  association  and  in  justice  to  the 
delinquent  borrower.  The  proceeds  derived  from  the  sale 
of  securities  must  be  applied  as  follows :  (1)  To  payment 
of  dues:  (2)  to  pa)mient  of  interest;  (3)  to  payment  of 
premiums;  (4)  to  payment  of  fines;  and  (5)  to  payment 
of  costs.  If  any  balance  remains  it  must  be  paid  over  to 
the  owner  and  his  receipt  in  full  taken.  The  rules  should 
be  explicit  in  reference  to  the  forefeiture  and  sale  of  secu- 
rities, for  this  step  involves  the  highest  interests  of  an 
association  and  of  its  members. 

[106] 


LOANS  AND  SECURITIES. 

APPRAISEMENT  OF  REAL  ESTATE. 

This  is  one  of  the  most  important  features  of  building 
association  operations.  It  is  in  the  acceptance  of  secu- 
rities that  the  association  assumes  its  risks.  Every  asso- 
ciation, of  course,  has  rules  governing  this  matter.  Never- 
theless, when  the  appraisers  come  to  the  actual  discharge 
of  their  duties  they  will  find  the  rules  insufficient  to  cover 
all  the  details,  and  that  many  incidental  matters  must  be 
considered  and  decided  in  their  own  discretion.  A  few 
general  suggestions  in  this  connection  will  be  of  value, 
especially  in  new  associations  and  to  those  inexperienced 
in  such  matters. 

1.  The  members  of  the  association  most  capable  by 
intelligence  and  experience  should  be  on  the  appraising 
committee. 

2.  The  appraisers  should  always  base  their  valuation 
of  property  upon  information  obtained  direct  by  them- 
selves by  observation  and  personal  investigation,  and 
should  not  depend  upon  hearsay  from  any  source. 

3.  They  should  inform  themselves  fully  in  reference 
to  the  actual  status  of  the  property,  as  to  its  rightful 
ownership,  its  freedom  from  incumbrance,  and  other  such 
matters. 

4.  They  should  consider  its  situation  and  condition 
with  reference  to  roads,  drainage,  water,  gas,  etc. 

5.  If  the  property  is  improved,  they  should  note  the 
character  of  the  building,  the  quality  of  material  and  of 
workmanship,  its  arrangement,  number  and  size  of  rooms, 
and  also  incidental  matters  in  the  way  of  out-houses, 
walks,  fences,  grading,  shade-trees,  etc. 

[107] 


CHAPTER  XII. 

6.  In  making  up  the  valuation  they  should  give  full 
details  of  items  for  land  and  buildings  separately. 

7.  The  valuation  should  be  based  upon  the  intrinsic 
worth,  and  not  upon  competitive  or  speculative  estimates. 

8.  The  values  to  be  fixed  by  the  committee  of  appraise- 
ment or  expert  valuations  should  be  carefully  considered 
in  all  its  details.  The  so-called  physical  surroundings,  the 
condition  of  the  neighborhood  and  the  building  restric- 
tions, limitations  or  conditions  governing  the  property 
offered  as  security  as  well  as  its  relation  to  the  adjoining 
property  should  be  carefully  examined  by  experienced 
persons.  The  character  of  a  borrower,  his  standing  with 
the  community  as  to  honesty,  sobriety  and  integrity,  his 
thrift  and  ability  to  save,  must  be  considered  when  applica- 
tion for  a  loan  is  made.  The  amount  of  the  loan  to  be 
granted  should  be  carefully  considered.  In  our  opinion 
the  object  of  building,  loan  and  savings  associations  is  to 
furnish  funds  for  homes,  rather  than  for  mercantile  or 
manufacturing  improvements.  Some  of  the  larger  asso- 
ciations have  granted  loans  of  this  character,  and  we  con- 
sider it  a  dangerous  departure  from  the  purposes  for 
which  these  associations  were  created. 

9.  They  should  also  inquire  into  the  borrower's  rela- 
tion to  the  association,  reviewing  his  payments,  his  ability 
to  pay,  etc. 

10.  This  last  is  very  important,  since  many  serious 
troubles  arise  from  members  agreeing  to  pay  more  than 
they  are  capable  of  doing. 

11.  Investigation  should  be  made  as  to  the  amount  of 

[108] 


LOANS  AND  SECURITIES. 

insurance  (life,  health,  disability  or  accident,)  and  if  the 
same  are  regularly  paid  for. 

EXPERT  APPRAISERS. 

In  many  of  the  large  associations  the  board  of  directors 
find  it  inconvenient  to  investigate  individually  the  prop- 
erties offered  as  security,  and  the  matter  of  investigation 
of  loans  and  all  the  details  in  connection  therewith  are 
referred  to  an  expert  on  the  value  of  real  estate  and  build- 
ings, whose  duty  it  is  to  make  a  careful  investigation  as  to 
value,  improvements  and  physical  risk  of  the  loan.  This 
report,  with  an  affidavit  of  the  expert,  is  filed  with  the 
secretary  of  the  association,  who  thereupon  brings  the 
application  before  the  regular  meeting  of  the  board,  so 
that  they  may  investigate  the  details ;  or  in  some  cases  this 
is  referred  to  a  special  committee  on  loans,  which  meets  at 
the  call  of  the  secretary,  and  it  is  empowered  to  grant 
loans  immediately  to  the  borrower.  This  action  then  is 
brought  before  the  regular  meeting  of  the  board  and 
formally  ratified  in  accordance  with  the  provisions  of  the 
constitution  and  by-laws. 

STRAIGHT  MORTGAGE  LOANS. 

Another  departure  from  the  old  method  of  making 
loans  has  been  that  of  making  so-called  straight  mortgage 
loans  to  persons.  The  application  for  money  is  handled 
in  the  same  manner  as  stated,  but  the  borrower,  instead 
of  repaying  the  amount  in  regular  stated  payments,  makes 
a  loan  that  is  for  a  definite  number  of  years,  at  whatever 
amount  is  stipulated  in  the  contract  with  the  association. 
There  is  an  increased  demand  on  the  part  of  the  public  for 
loans  of  this  character. 

[109] 


CHAPTER  XIII. 


Corporate  Government. 


THE  CORPORATE  MEETING. 

A  CORPORATE  meeting  is  a  meeting  of  the  members  of 
an  association  regularly  assembled.  Meetings  may  be 
general  or  special.  The  member  thus  assembled  in  a 
corporate  meeting  constitute  the  supreme  power  of  the 
association.  But  in  their  action  they  are  nevertheless 
subject  to  restrictions.  If  the  association  is  organized  and 
incorporated  under  general  or  special  laws  of  the  state,  the 
corporate  meeting  must  confine  its  actions  within  the 
limits  laid  down  in  the  charter  and  the  statutes  under 
which  it  acts.  The  corporate  meeting  fixes  its  own  consti- 
tution and  by-laws  in  accordance  with  statutory  limita- 
tions. But  after  these  are  once  fixed  it  has  no  power  to 
change  them  except  in  accordance  with  the  rules  which  it 
has  established.  Where  associations  are  not  organized 
and  incorporated  under  special  charters  they  are,  of  course, 
subject  to  the  general  statutes  and  laws  of  equity  like 
other  incorporated  companies.  The  entire  association  is 
bound  by  the  acts  of  a  majority  of  its  members  when  those 
acts  are  legal  and  in  due  form.  In  the  absence  of  special 
provision  in  the  rules  of  the  association  a  question  may 
arise  as  to  what  is  meant  by  a  majority.    It  has  been  held 

[110] 


CORPORATE  GOVERNMENT. 

that  an  association  is  bound  by  the  acts  of  a  majority  of 
those  present  at  a  regular  meeting,  whether  they  constitute 
a  majority  of  the  members  or  not.  It  has  been  held  further 
that  a  majority  does  not  necessarily  constitute  a  majority 
of  all  members  present,  but  of  all  the  members  present 
and  voting.  But  it  is  better  that  the  rules  of  the  associa- 
tion should  state  definitely  what  proportion  of  the  mem- 
bership shall  constitute  a  quorum  for  the  transaction  of 
business.  Then  if  this  number  is  not  present  a  meeting  can 
transact  no  business  except  to  adjourn  to  some  other  date. 
Where  the  statutes  or  the  rules  of  the  association  do  not 
fix  the  quorum  the  rule  is  that  a  majority  of  all  those 
present  and  entitled  to  vote  at  a  duly  called  meeting  shall 
constitute  a  quorum. 

Where  the  statutes  do  not  determine  the  right  of  a 
member  to  be  represented  by  proxy  the  question  should  be 
settled  specifically  in  the  constitution  and  by-laws. 

GENERAL  MEETINGS. 

The  general  meetings  of  associations  are  those  corporate 
meetings  which  occur  at  the  stated  times  fixed  by  the 
constitution  or  by-laws.  The  shareholders  should  meet 
at  least  once  in  six  months,  generally  on  the  first  meeting 
night  in  the  month  following  the  close  of  each  fiscal  half 
year.  The  meetings  are  held  at  the  place  designated  by 
the  board  of  directors.  Each  member  must  be  advised  of 
the  time  and  place  of  the  meeting,  either  by  individual 
notification  by  letter  or  otherwise,  or  by  advertisement  in 
some  paper  of  general  circulation  regularly  issued  in  the 
vicinity.    The  usual  business  of  such  meetings  is  the  elec- 

[111] 


CHAPTER  XIII. 

tion  of  officers  and  the  determining  of  the  general  policy 
and  management  of  the  association.  The  desires  of  the 
members  may  be  expressed  through  the  election  of  certain 
persons  to  fill  the  offices  who  are  pledged  to  a  certain  line 
of  conduct  in  the  management  of  the  affairs  of  the 
association. 

The  business  of  the  general  or  corporate  meeting  should 
be  conducted  according  to  the  order  of  business  laid  down 
in  the  rules.  The  reports  of  officers  is  a  prominent  feature 
of  these  meetings.  These  reports,  when  represented  in 
proper  form,  give  the  members  a  clear  idea  of  the  business 
of  the  association,  and  enable  them  to  determine  intel- 
ligently as  to  the  policy  for  its  future  management. 

SPECIAL  MEETINGS. 

Provision  should  be  made  in  the  constitution  and  by- 
laws for  the  calling  of  special  meetings.  These  ought  to 
be  so  drawn  that  the  officers  whose  duty  it  is  to  call  such 
meetings  have  no  discretion  in  the  matter,  but  should  be 
compelled  to  act  upon  the  request  of  a  certain  number  of 
members.  There  ought  to  be  also  a  rule  that  in  the  calling 
of  special  meetings  all  the  members  must  be  notified  in 
proper  manner,  and  that  otherwise  the  proceedings  of  the 
meetings  shall  be  invalid.  Such  provisions  are  necessary 
in  order  to  protect  properly  the  rights  of  members.  In  the 
absence  of  these  rules,  it  has  been  held  under  the  general 
laws  that  each  member  must  have  personal  notice,  that  a 
reasonable  time  must  be  given,  and  that  the  call  must  be 
issued  by  authority  competent  to  call  a  meeting.  But  if  all 
persons  entitled  to  vote  unanimously  consent,  notice  of 

[112] 


CORPORATE  GOVERNMENT. 

meetings  may  be  waived  and  the  proceedings  will  be  valid. 
Special  meetings  can  transact  no  other  business  than  that 
named  in  the  call. 

An  adjourned  meeting  may  transact  any  business  that 
may  be  lawfully  transacted  at  the  original  meeting.  The 
acts  of  a  meeting  irregularly  convened  are  not  binding. 

MANAGEMENT  OF  CORPORATE  MEETINGS. 

A  few  suggestions  in  regard  to  the  management  of 
corporate  meetings  will  not  be  out  of  the  way.  Under 
our  democratic  form  of  civil  government,  citizens,  through 
the  influence  of  our  ordinary  political  methods,  become 
educated  to  the  habit  of  delegating  their  authority  to 
others.  The  result  is  that  many  good  citizens  neglect  and 
ignore  their  duty  as  such  and  leave  public  affairs  to  be 
directed  by  others.  This  custom  is  too  often  carried  into 
building  associations  and  other  corporate  bodies.  This 
ought  not  to  be.  Every  member  of  an  association  should 
keep  himself  thoroughly  informed  in  reference  to  its  busi- 
ness and  management  at  all  times.  He  should  not  fail 
to  be  present  in  person  at  every  corporate  meeting. 

At  any  corporate  meeting  it  should  be  the  business  of 
some  one,  usually  the  president  or  the  secretary,  to  make 
a  clear  statement  of  the  purpose  of  the  meeting,  and  to 
present  all  the  facts  in  connection  with  the  work  of  the 
association  which  bear  upon  the  matter  to  be  considered. 
It  is  well,  also,  from  time  to  time  in  such  meetings,  both 
for  officers  and  members,  to  review  the  provisions  of  their 
charter,  that  they  may  be  sure  that  their  operations  are  all 
kept  within  the  proper  legal  and  constitutional  bounds.    It 

[113] 


CHAPTER  XIII. 

is  easy,  when  the  members  and  officers  of  an  association 
are  careless,  for  its  methods  and  operations  gradually  to 
slip  outside  of  the  limits  which  they  were  originally 
intended  to  occupy. 

At  any  regular  corporate  meeting  there  should  always 
be  a  clear,  business-like  statement  of  what  the  association 
has  accomplished  during  the  past  year,  and  what  is  ex- 
pected to  be  accomplished  during  the  coming  year.  These 
facts  being  before  the  members,  they  are  able  to  determine 
whether  the  association  is  accomplishing  the  work  for 
which  it  was  intended.  If  it  is,  well  and  good ;  if  not, 
measures  must  be  taken  to  correct  its  mistakes. 

Members  should  also  bear  in  mind  that  no  association 
is  of  any  worth  or  power,  simply  from  the  fact  that  it  is 
an  association.  Its  power  and  efficiency  is  only  the  joint 
power  and  efficiency  of  the  men  and  women  who  compose 
it.  If  they  do  not  attend  its  meetings,  if  they  neglect  its 
business,  or  go  to  meetings  and  simply  hold  up  their  hands 
and  vote  like  machines,  and  give  no  active  thought  to  its 
business  through  the  whole  course  of  the  year.  They  are 
an  incumbrance,  rather  than  a  help  to  it.  The  officers  and 
directors  should  have  evidence  of  the  never-lagging 
interest  of  the  membership.  This  will  not  only  put  a 
proper  check  upon  them  in  their  management  of  the  asso- 
ciation's affairs,  but  it  will  also  spur  them  to  continued 
diligence  and  efficiency.  Any  officer  or  member  of  an 
association  who  satisfies  himself  with  the  mere  perfunc- 
tory discharge  of  the  routine  duties  of  his  position  makes 
a  serious  mistake.    His  active  and  intelligent  participation 

[114] 


CORPORATE  GOVERNMENT. 

and  interest  in  the  association's  affairs  at  all  times  are 
necessary  to  its  highest  success. 

OFFICERS:    THEIR  ELECTION  AND  GENERAL  POWERS. 

As  Stated  before  one  of  the  principal  functions  of  the 
corporate  meeting  is  the  election  of  officers.  This  must 
take  place  in  the  manner  and  at  the  time  required  by  the 
constitution  and  by-laws.  If  these  prescribe  no  particular 
form  for  elections,  then  it  has  been  held  that  no  election 
conducted  in  good  faith  will  be  set  aside.  Some  associa- 
tions provide  by  constitutional  rule  that  a  double  or  larger 
number  of  candidates  for  each  office  shall  be  nominated, 
from  whom  the  members  are  to  elect;  but  it  has  been 
held,  in  some  states,  that  a  member  receiving  a  majority* 
or  plurality  of  votes,  as  the  case  may  be,  is  duly  elected 
and  entitled  to  hold  the  office,  even  if  his  name  is  not  on 
the  list  of  those  nominated.  When  candidates  are  properly 
nominated,  and  the  election  is  held  in  due  form  and  at  the 
proper  time  and  place,  those  candidates  receiving  a 
majority  of  the  votes  cast  are  elected.  This  is  true 
even  though  the  majority  of  the  entire  association  may 
refrain  from  voting,  except  in  case  the  constitution  makes  a 
provision  to  the  contrary.  If  from  any  cause  the  election 
is  not  held  at  the  proper  time  set  in  the  constitution,  the 
association  nevertheless  continues,  and  the  old  officers  are 
in  authority  until  their  successors  shall  be  duly  elected 
and  qualified.  The  casting  of  improper  votes  at  an  elec- 
tion does  not  vitiate  it  unless  it  can  be  shown  that  the  result 
would  have  been  different  had  they  not  been  received.  On 
the  other  hand,  if  it  can  be  shown  that  legal  votes  have  been 

[115] 


CHAPTER  XIII. 

rejected  and  their  reception  would  have  changed  the  result 
of  the  election,  the  election  is  vitiated  and  a  new  one  must 
be  held.  Ballots  containing  the  names  of  a  less  number  of 
directors  than  are  provided  for  must  be  received,  but  those 
containing  a  greater  number  must  be  rejected.  An  inspec- 
tor or  judge  of  an  election  may  also  be  a  candidate. 

The  acts  oi  de  facto  officers  are  binding  upon  a  corpora- 
tion, especially  so  far  as  these  acts  affect  third  parties, 
even  though  it  may  afterwards  be  decided  that  the  officers 
were  ineligible. 

The  management  of  the  affairs  of  an  association  is 
entrusted  so  entirely  to  its  board  of  officers  that  the 
greatest  care  should  be  exercised  to  select  only  proper 
persons  as  officers,  and  that  there  should  be  no  question 
as  to  their  regular  and  lawful  election. 


[116] 


CHAPTER  XIV. 


Election  and  Duties  of  Officers, 


OFFICERS  REQUIRED. 

The  officers  of  a  building  association  are  the  same  as  of 
any  other  corporation  or  business  body.  They  consist 
usually  of  a  president,  a  vice-president,  a  secretary, 
assistant  secretaries,  a  treasurer,  an  attorney  and  a  board 
of  directors. 

ELECTIONS. 

The  constitution  provides  for  the  time,  place,  and  man- 
ner of  elections.  Since  the  officers  are  the  actual  managers 
of  the  business  of  the  association  the  provisions  for  their 
election  should  be  so  plain  and  explicit  as  to  leave  no  room 
for  doubtful  or  uncertain  action.  The  officers  are  to  be 
clothed  with  legal  powers.  There  should  be  no  question 
as  to  their  legal  qualifications. 

Attention  has  been  called  already  to  the  necessity,  in  the 
the  organization  of  an  association,  of  selecting  as  officers 
those  persons  who  by  character,  ability  and  experience 
are  best  qualified  to  serve  in  that  capacity.  The  bearing 
of  the  officers,  their  intelligence,  and  their  business  ability 
and  sagacity,  will  have  much  to  do  with  an  association's 
popularity  and  success.     They  must  be  polite  to  all  the 

[in] 


CHAPTER  XIV. 

members  and  other  persons  visiting  the  headquarters  of 
the  association  or  calling  upon  them  privately ;  they  must 
be  ready  to  respond  intelligently  to  all  proper  inquiries 
relating  to  the  business  of  the  association;  they  must 
require  that  all  moneys  in  which  the  association  is 
interested  are  properly  and  promptly  accounted  for ;  they 
must  be  quick  to  seize  upon  every  advantage  that  can  be 
used  to  further  the  interests  of  the  association ;  they  must 
carefully  guard  all  investments  or  loans  of  the  association ; 
and  must,  in  general,  be  as  watchful  and  careful  of  all 
matters  pertaining  to  the  association  as  any  successful 
business  man  must  be  of  his  own  interests  and  business. 
Officers  by  faithfulness  may  build  up  an  association  and 
make  it  very  strong,  while  by  indifference  and  irregularity 
of  proceedings,  they  may  destroy  its  popularity  and  use- 
fulness, and  even  its  existence. 

As  the  usual  elections  recur  year  after  year  the  question 
of  the  re-election  of  certain  persons  to  certain  offices  will 
arise.  There  is  one  rule  which  should  always  prevail  at 
elections,  and  that  is  to  seek  the  greatest  good  for  the 
association.  This  can  be  accomplished  in  two  ways :  by  the 
re-election  of  faithful  and  efficient  officers,  and  by  the 
introduction  of  new  blood,  new  energy,  and  new  influences 
into  the  management.  In  connection  with  the  re-election 
of  officers  it  should  be  borne  in  mind  that  no  one  member 
should  be  overburdened  with  the  work  of  an  association. 
On  the  other  hand  an  association  should  secure  the  benefit 
as  far  as  possible  of  the  knowledge  of  its  affairs  and  work- 
ings possessed  by  its  experienced  officers.  A  good  rule  is 
— other  things  being  equal — to  re-elect  the  salaried  officers 

[118] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

as  long  as  their  work  is  satisfactory  and  no  special  reason 
arises  for  making  a  change.  Their  knowledge  of  the 
details  of  the  business  is  very  valuable.  It  is  best  to  re-elect 
some  of  the  other  officers,  especially  directors,  at  each  elec- 
tion. It  is  only  on  rare  occasions  where  there  is  to  be 
some  radical  change  in  the  management  of  an  asso- 
ciation, that  an  entirely  new  board  of  directors  should 
be  chosen.  Where  there  is  no  necessity  for  mak- 
ing a  change,  it  is  best  to  re-elect  a  strong  representation 
from  the  old  board.  Indeed,  in  order  to  avoid  sudden 
and  unfortunate  changes  in  the  board  and  to  secure 
opportunity  at  the  same  time  for  desirable  rotation  in 
office,  some  associations  adopt  a  rule  to  the  effect  that  at 
the  first  election  one-third  of  the  directors  shall  be  elected 
for  a  one-year  term,  one-third  for  two  years,  and  one-third 
for  three  years.  Then  at  each  subsequent  election  one- 
third  of  the  whole  number  of  the  board  is  chosen  for  the 
full  three-year  term. 

DUTIES  OP  PRESIDENT  AND  VICE-PRESIDENT. 

In  general  terms  the  duties  of  the  president  and  thq 
vice-president,  as  indeed  of  all  the  officers  of  an  associa- 
tion, are,  in  the  absence  of  special  provisions  and  limita- 
tions, the  same  as  belong  to  similar  officers  in  other  like 
bodies.  Thus,  unless  there  be  special  provisions  to  the 
contrary  in  the  constitution  or  by-laws  of  an  association, 
it  is  the  duty  of  the  president,  or,  in  his  absence,  of  the 
vice-president,  or  of  one  of  the  vice-presidents  (who  act 
in  their  numerical  order),  to  call  meetings  of  the  associa- 
tion, and  to  preside  and  preserve  proper  order  at  the  same, 

[119] 


CHAPTER  XIV. 

to  sign  the  contracts  of  the  association,  to  execute 
other  official  documents,  to  sign  warrants  drawn  upon  the 
treasurer,  to  keep  the  seal  of  the  association,  and,  with  the 
board  of  directors,  to  make  provisional  arrangements  to 
meet  all  the  various  unprovided- for  emergencies  and  neces- 
sities of  the  business  of  the  association.  The  president 
appoints  all  committees  for  the  appointment  of  which  no 
other  provision  is  made.  For  the  relief  of  the  president 
and  other  officers  from  uncertainty  and  unnecessary  and 
irksome  responsibility,  the  constitution  and  by-laws  should 
specify  as  fully  and  clearly  as  possible  the  duties  imposed 
upon  each  them. 

DUTIES  OF  SECRETARY. 

The  office  of  secretary  is  in  many  respects  the  most 
important  in  the  association.  He  is  the  custodian  of  its 
business  and  records,  and  the  source  of  information  con- 
cerning its  affairs ;  he  keeps  the  minutes  of  all  the  official 
proceedings  of  the  association  and  its  board  of  directors ; 
he  conducts  the  correspondence;  he  keeps  the  financial 
accounts;  and  is,  in  general,  the  agent,  and  to  a  large 
extent,  the  acting  manager  of  the  entire  business  of  the 
association.  He  attests  the  signature  of  the  president  on 
all  the  official  documents. 

He  should  submit  quarterly,  semi-annual,  and  annual 
reports  to  the  association,  as  may  be  required  by  the  rules. 
These  reports  should  always  be  written  out  plainly, 
neatly  ruled,  and  should  present  a  full  account  and  sum- 
mary of  the  business  for  the  preceding  term.  They  should 
include  a  complete  balance  sheet,  giving  a  detailed  exhibit 

[120] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

of  the  profit  and  loss  accounts,  and  a  statement  of  all 
assets  and  liabilities  of  the  association.  Usually  the  direc- 
tors authorize  the  secretary  to  have  these  reports  printed 
for  distribution  among  the  members.* 

The  secretary  possesses  unusual  powers  and  carries 
heavy  responsibilities.  The  constitution  and  by-laws 
should  give  him  clear  and  specific  instructions  in  regard 
to  his  duties  and  liabilities.  No  mistake  should  be  made 
in  the  selection  of  the  secretary,  and  when  once  chosen  he 
should  have  the  cordial  support  and  co-operation  of  all 
the  shareholders. 

ASSISTANT  SECRETARIES. 

The  business  of  some  associations  is  so  large,  or  the 
secretary  is  so  occupied  with  other  business,  that  the 
employment  of  assistant  secretaries  is  necessary.  They  are 
usually  employed  by  the  directors.  Their  duties  are 
clerical,  and  they  work  under  the  direction  of  the  secretary. 

DUTIES  OF  TREASURER. 

The  treasurer  is  the  custodian  of  the  association's  funds. 
Unlike  the  president  and  secretary,  he  possesses  no  discre- 
tionary powers.  His  duties  are  entirely  ministerial.  He 
must  give  his  receipt  for  all  money  placed  in  his  hands, 
and  is  responsible  for  all  the  funds  of  the  association  he 
thus  holds.  He  may  not  pay  out  any  money  except  upon 
warrants  drawn  in  due  form  in  the  manner  provided  by 
the  rules  of  the  association.  He  must  keep  correct  accounts 
of  all  receipts  and  payments.    He  is  not  liable  for  the  pay- 


See  Chapter  on  Forms. 

[121] 


CHAPTER  XIV. 

ment  of  warrants  duly  drawn  by  the  proper  officers  of  the 
association,  even  though  the  money  is  wrongfully  applied 
by  them. 

He  cannot  hold  the  association  responsible  for  money 
which  he  may  advance  for  legitimate  purposes  without  a 
warrant.  As  a  general  rule  the  treasurer  should  not  be  al- 
lowed to  make  his  own  selection  of  the  bank  or  place  of 
deposit  for  the  funds  of  the  association,  unless  the  question 
is  fixed  by  the  statutes.  If,  however,  the  board  of  directors 
select  the  place  of  deposit,  he  is  not  liable  for  loss  of  the 
association's  funds  by  the  robbery  or  failure  of  the  bank 
which  they  have  selected.  When  the  treasurer  himself 
selects  the  bank  of  deposit  he  is  not  liable  for  loss  by  rob- 
bery or  failure,  provided  that  he  can  show  that  his  action 
has  been  free  from  fraud  or  negligence. 

GENERAL  MANAGER. 

In  the  larger  associations  it  is  now  the  custom  to  select 
what  is  known  as  the  general  manager  of  the  institution. 
This  official  has  under  his  control  the  active  management 
of  the  affairs  of  the  association.  He  is  selected  by  a  board 
of  directors  and  holds  his  office  at  the  pleasure  of  the 
board.  In  some  associations  a  member  of  the  board  of 
directors  is  selected,  and  in  others  some  one  outside  the 
board  of  directors  is  chosen.  All  business  transac- 
tions relating  to  the  affairs  of  the  association  are  care- 
fully kept  on  regular  forms,  and  must  be  submitted  to  the 
board  of  directors  at  its  next  regular  meeting  for 
approval. 

[122] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

DUTIES  OF  DIRECTORS. 

The  board  of  directors  are  the  responsible  managers  of 
the  association.  In  them  is  vested  the  power  to  order  and 
transact  all  business  for  the  association,  and  their  acts 
are  the  acts  of  the  association.  Their  powers  and  limita- 
tions must  be  defined  by  the  constitution  and  by-laws.  If 
they  fail  of  the  full  discharge  of  their  duties  as  thus 
defined,  they  are  responsible  to  the  members  of  the  asso- 
ciation. If,  on  the  other  hand,  they  transcend  these  powers 
of  the  association,  they  themselves  become  personally 
liable  to  the  parties  interested. 

It  may  be  said  in  general  terms  that  the  directors  of  an 
association  have  charge  of  the  disposition  of  the  funds,  the 
making  of  loans,  the  acceptance  of  securities,  the  filling  of 
vacancies  in  the  offices,  and  the  providing  of  proper  com- 
pensation for  services  when  this  is  not  otherwise  fixed. 
They  are  subject  to  the  control  of  the  corporate  meeting, 
but  not  of  individual  members.  A  member  may,  however, 
on  behalf  of  himself  and  others,  proceed  by  law  against  the 
directors  for  illegal  acts. 

The  number  of  meetings  of  the  board  of  directors  is 
usually  fixed  by  the  constitution,  but  the  time  and  place 
may  be  determined  by  the  directors  themselves.  When 
the  association  has  an  office,  or  regular  place  of  business, 
it  is  best  that  the  directors'  meeting  be  held  there.  The 
time  of  the  regular  meetings  of  the  directors  should  be 
fixed  and  made  known  to  the  members  of  the  association. 
The  directors  may  call  special  meetings,  both  of  the  mem- 
bers in  general,  or  of  their  own  body.  All  directors  must 
have   notice   of   such    meetings,    and  acts   of   meetings 

[123] 


CHAPTER  XIV. 

irregularly  called  or  convened  are  invalid,  except  so  far 
as  the  interests  of  a  third  and  innocent  party  may  suffer. 
The  rules  of  an  association  should  specify  carefully  what 
number  of  directors  shall  constitute  a  quorum  for  the 
transaction  of  business.  Except  by  special  provision,  a 
director  cannot  delegate  his  powers  to  another  person; 
but  the  full  board  may  delegate  some  portion  of  its  work  to 
a  committee  appointed  to  attend  to  it.  They  should  keep 
full  and  accurate  minutes  of  their  transactions.  A  director, 
as  an  individual,  may  make  a  contract  with  the  association, 
provided  he  secures  no  special  advantage  not  common  to 
other  members.  A  director  becomes  personally  liable  to 
the  stockholders  for  losses  when  they  are  occasioned  by 
reason  of  fraud  or  connivance  at  fraud  upon  the  associa- 
tion. Directors  are  liable  for  embezzlement,  willful  mis- 
conduct, breach  of  trust,  or  gross  inattention  and  neg- 
ligence. They  are  not  liable  for  mistakes  of  judgment, 
however,  absurd,  provided  they  are  honest  and  within  the 
scope  of  their  powers  and  discretion.  A  director  who  is 
a  party  to  a  fraud  upon  an  association  is  barred  from 
sharing  in  its  benefits. 

DUTIES  OF  TRUSTEES. 

The  duty  of  trustees,  where  such  officers  are  appointed, 
is  to  hold  and  convey  titles  for  the  association  under  the 
order  of  the  board  of  directors.  Very  few  associations 
now  have  trustees,  this  being  regarded  as  useless,  unneces- 
sary, and  cumbersome. 


[124] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

THE    ATTORNEY:     HIS    APPOINTMENT,    DUTIES,    AND    COMPEN- 
SATION. 

Every  association  must  have  a  duly  authorized  legal 
adviser.  He  should  be  a  regular  officer  of  the  association. 
He  usually  is  designated  officially  as  attorney,  though  he 
is  sometimes  termed  solicitor,  or  counselor.  The  manner 
of  his  appointment  differs.  In  some  associations  he  is 
elected  at  the  same  time,  and  in  the  same  manner,  and  for 
the  same  term,  as  the  other  officers.  But  more  frequently 
— and  this  seems  much  the  better  way — he  is  selected  and 
employed  by  the  board  of  directors.  In  making  this 
appointment  the  directors  cannot  be  too  careful.  His  posi- 
tion is  one  in  which  he  may  do  great  good  or  harm  to  the 
association.  There  are  emergencies  in  which  the  welfare 
and  even  the  continued  existence  of  the  association  will 
depend  almost  entirely  upon  his  intelligence,  honesty,  and 
faithfulness.  He  should  be  a  man  of  good  standing  in  his 
profession.  He  should  have  a  moderate  independent 
practice,  not  so  much  as  to  absorb  his  time  and  thought 
to  the  exclusion  of  the  care  of  the  affairs  of  the  associa- 
tion, nor,  on  the  other  hand,  so  moderate  as  to  induce  him 
to  undertake  arbitrarily  to  make  business  out  of  the  asso- 
ciation. Many  an  attorney,  who  has  the  real  interests  of 
his  association  at  heart,  is  the  most  active  and  efficient 
agent  in  securing  desirable  members  in  its  organization, 
and  in  so  increasing  its  list  of  shareholders  from  time  td 
time  as  to  put  it  upon  a  permanent  working  basis.  The 
attorney  should  be  a  man  of  such  character  as  will  give 
the  directors  some  degree  of  pride  in  placing  his  name 
upon   their   reports   and   documents.      In    England   the 

[125] 


CHAPTER  XIV. 

attorney  must  be  appointed  and  commissioned  under  the 
official  seal  of  the  society. 

Whatever  may  be  the  method  of  his  appointment  it  is 
the  duty  of  the  attorney  to  act  as  the  legal  adviser  of  the 
association  upon  all  legal  matters  connected  with  its 
business.  He  advises  the  other  officers  and  the  directors 
in  regard  to  their  functions  and  duties  and  the  proper 
disposition  of  the  business  of  the  association.  He  examines 
records  and  titles.  He  prepares  or  passes  upon  the  forms 
and  blanks  to  be  used  by  the  association,  and  gives  his 
advice  in  the  execution  of  all  official  documents. 

The  following  article  from  The  American  Building 
Association  News,  of  Cincinnati,  written  by  Hiram  M. 
Rulison,  Jr.,  an  attorney  of  much  experience  in  building 
association  matters,  covers  this  whole  subject  so  well  that 
it  is  worth  incorporating  here.    Mr.  Rulison  says : 

"After  the  appraising  committee  has  completed  its  work  in  actually 
inspecting  the  property  as  to  its  value,  it  is  then  that  the  duty  and 
responsibility  of  the  attorney  begins.  It  really  should  begin  before 
even  the  work  of  the  appraising  committee  begins,  by  carefully 
preparing  a  plat  showing  the  exact  location  of  the  property  to  be 
appraised,  so  that  no  mistake  could  possibly  be  made  and  no  excuse 
could  be  offered,  in  case  the  wrong  property  should  by  any  accident 
be  appraised  for  the  loan. 

In  one  or  two  cases  where  gross  frauds  were  attempted  to  be 
perpetrated,  this  was  the  excuse  offered  by  the  appraising  committee ; 
that  they  had  appraised  the  wrong  property.  This  could  be  prevented 
in  every  case  by  a  careful  preparation  by  the  attorney  of  a  proper 
plat.  Some  attorneys  think,  in  order  to  retain  their  position  and 
stand  well  with  the  board,  that  all  they  are  called  upon  to  do  is  to 
report  on  the  title  as  they  find  it,  regardless  of  the  actual  value  of 
the  property  or  the  financial  standing  of  the  prospective  borrower. 
No  greater  mistake  could  possibly  be  made. 

An  honorable  attorney  will  report  all  the  facts  as  he  finds  them, 
and  if  he  does  not  do  so  he  is  violating  a  sacred  duty  he  owes  to  the 

[126] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

hundreds  of  trusting  depositors,  who  are  relying  upon  his  honor 
and  integrity  to  protect  their  hard-earned  savings.  One  of  the  recent 
failures  of  a  well  known  association  could  have  been  avoided,  had 
the  attorney  who  examined  the  title  of  the  property  on  which  an 
$8,000  loan  was  granted,  been  honorable  enough  to  inform  the  board 
that  the  property  was  in  a  deep  gully;  that  it  was  taxed  at  only  a 
few  hundred  dollars,  and  had  only  recently  been  appraised  for  a  loan 
in  another  association  at  only  $1,500, 

A  failure  to  disclose  facts  of  this  kind  is  nothing  but  downright 
dishonesty,  and  would  lead  unsophisticated  people  to  believe  that 
such  an  attorney  was  'interested.'  About  the  same  time,  a  prospective 
loan  of  about  the  same  amount  was  defeated  and  the  association 
saved  by  the  brightness  and  honesty  of  the  attorney,  who  boldly 
reported  all  the  facts  to  the  board  and  insisted  upon  a  full  examina- 
tion of  all  the  facts,  which  disclosed  a  similar  state  of  affairs  as  first 
referred  to.  The  plunderers  were  exposed  and  the  depositors'  money 
saved. 

A  careful  attorney  would  report,  if  the  fact  came  to  his  notice, 
anything  of  an  unfavorable  nature  that  might  be  developed  in  regard 
to  the  prospective  borrower ;  as  for  instance,  that  all  the  other  prop- 
erty which  the  party  owned  was  covered  by  mortgage  to  its  full 
value;  that  the  limit  was  being  stretched  in  the  present  instance; 
that  other  loans  had  been  foreclosed;  that  the  present  loan  was  a 
mere  shifting  around,  'borrowing  from  Peter  to  pay  Paul,'  or  any- 
thing else  that  might  come  to  his  notice.  No  doubt  the  borrower 
would  denounce  such  an  attorney  for  being  a  meddlesome  man,  but 
the  directors  and  depositors  would  bless  him.  The  attorney  should 
always  report  the  tax  valuation  of  all  property  examined;  for 
although  the  tax  value  is  scarcely  ever  a  fair  criterion  to  measure 
values  by,  still  it  is  in  most  cases  a  great  help.  The  officers  of  the 
board  and  the  appraising  committee  may  be  the  most  careful  men  in 
the  world,  and  may  perform  all  their  duties  in  the  most  careful 
manner  possible,  but  it  will  amount  to  nothing  if  the  attorney  is 
derelict  in  his  duties. 

He  cannot  make  too  careful  an  examination.  This  he  some- 
times realizes  when  too  late,  especially  when  he  happens  to  overlook 
a  mortgage,  judgment,  or  a  mechanic's  lien,  and  is  called  upon  to 
make  the  amount  good,  as  sometimes  happens.  If  so  much  care  is 
required  of  an  'honest  attorney'  just  think  how  completely  an  asso- 
ciation is  at  the  mercy  of  a  man  who  is  careless  in  his  habits,  or 
who  chooses  to  be  dishonest  and  to  work  in  collusion  with  a  dis- 

[127] 


CHAPTER  XIV. 

honest  borrower;  he  could  bankrupt  the  association  in  short  order 
more  completely  than  either  the  secretary  or  the  treasurer.  Only  men 
of  honor,  integrity,  ability,  and  experience,  should  be  entrusted  with 
this  great  responsibility.  Not  the  least  of  their  duties  is  that  of 
approving  the  sufficiency  of  the  sureties  on  the  bond  of  officers. 
And  this  should  always  be  carefully  attended  to. 

I  have  even-  thought  that  an  attorney  should  be  somewhat  familiar 
with  book-keeping,  and  that  he  should  be  willing  to  serve  occasionally 
on  an  auditing  committee  in  order  to  see  that  this  branch  of  the 
business  was  properly  attended  to.  In  other  words  an  attorney 
should  be  one  of  the  best  posted  men  in  all  the  doings  and  workings 
of  an  association,  including  not  only  the  law  but  the  best  methods  of 
management  and  business,  and  should  be  willing  to  assist  in  any  and 
every  way  possible;  for  if  any  one  person  more  than  another  receives 
a  benefit  from  the  association,  it  is  the  attorney. 

It  is  true  that  his  compensation  for  the  examination  of  titles  is 
small,  and  if  that  were  all  the  pay  he  received  he  could  hardly  afford 
to  do  the  work  for  the  money.  But  an  obliging  and  accommodating 
attorney  who  will  not  neglect  his  association,  but  will  attend  the 
meetings  with  some  degree  of  regularity  and  be  on  hand  with  a  word 
of  advice  when  most  needed,  and  let  the  people  get  in  the  habit  of 
meeting  him  on  these  occasions  regularly,  will  find  a  steady  flow  of 
business  from  this  source  alone,  which  will  amply  repay  him  for  the 
time  and  labor  expended. 

More  associations  are  organized  by  attorneys  for  the  sake  of 
getting  the  business,  than  by  any  other  class  of  individuals ;  and  yet, 
strange  to  say,  the  attorney  is  usually  the  one  to  be  the  first  to  lag 
behind  when  there  is  any  work  to  be  done,  unless  a  comfortable  fee 
is  in  sight.  I  have  frequently  heard  of  instances  where  the  attorney 
failed  to  attend  the  weekly  meetings  for  months  at  a  time.  These 
attorneys  are  not  enthusiastic  advocates  of  building  associations. 

On  the  other  hand  the  attorney  who  attends  regularly  finds  his 
hands  full  of  business,  keeps  his  association  out  of  useless  litigation 
by  a  little  timely  advice,  and  is  one  of  the  best  friends  of  the 
institution. 

Many  of  the  patrons  and  borrowers  are  working  people  whose 
time  is  not  their  own,  and  it  would  be  a  manifest  hardship  on  them 
to  compel  them  to  lose  a  day  to  dance  attendance  on  an  attorney's 
convenience,  when  with  a  little  effort  on  his  part  he  could  have  the 
necessary  papers  signed  at  the  association  and  thus  oblige  a  client, 
as  well  as  save  him  a  day's  wages. 

[128] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

I  do  not  say  this  could  always  be  done,  but  sometimes  it  certainly 
can  be,  especially  where  there  are  a  large  number  of  mechanics  who 
are  compelled  to  sign  a  release  of  any  claim  on  a  building  before 
the  can  draw  pay  for  labor  or  materials.  It  would  be  a  hardship  to 
compel  six  or  eight  men  to  lose  a  day  to  come  to  a  lawyer's  office 
when  all  the  business  could  be  done  at  the  association  without  loss 
of  time.  A  building  association  is  certainly  a  co-operative  institu- 
tion, and  every  one  connected  with  it  should  be  willing  to  do  his  part 
and  his  duty.  On  the  other  hand  directors  and  other  members  should 
not  expect,  (as  is  too  often  the  case)  that  the  attorney  is  bound  to 
attend  to  their  private  business  at  building  association  reduced  rates. 
It  is  true  he  may  be  able  to  cut  rates  on  some  on  the  score  of  friend- 
ship and  old  acquaintance,  and  this  he  undoubtedly  will  and  does  do, 
but  an  attorney  would  have  to  be  a  person  of  herculean  capacity  for 
work,  to  be  able  to  make  both  ends  meet  and  pay  expenses,  if  all  his 
work  were  done  at  these  rates.  This,  however,  is  a  fact  that  is  not 
always  taken  into  consideration  by  members,  and  sometimes  is  pro- 
ductive of  hard  feelings,  if  the  attorney  will  not,  or  cannot,  consent 
to  work  for  all  his  friends  at  cut  rates.  The  association,  too, 
frequently  criticises  an  attorney's  bill  for  foreclosing  a  mortgage, 
looking  upon  this  expenditure  as  a  dead  loss,  yet  it  is  one  of  the 
most  important,  and  sometimes  one  of  the  most  difficult  of  an 
attorney's  duties,  and  sufficient  compensation  should  be  allowed  to 
insure  careful  and  correct  work  on  the  part  of  the  attorney. 

All  questions  have  two  sides,  and  while  an  attorney  should  be 
able  and  willing  to  do  his  duty  thoroughly  and  conscientiously,  he 
should  at  the  same  time  receive  such  treatment  from  the  association 
and  its  membership,  as  will  at  least  assure  him  that  they  appreciate 
the  interest  he  may  take  in  their  welfare,  and  that  they  believe  that 
the  'laborer  is  worthy  of  his  hire.' " 

If  the  attorney  does  not  receive  a  stated  salary,  the 
directors  should  fix  a  system  of  fees  to  be  paid  him  for  the 
examination  of  titles  and  other  services.  Some  associa- 
tions have  a  graded  system  of  fees  for  the  examination 
of  titles.  If  a  member  borrows  one  share,  he  is  taxed  a 
certain  amount  for  the  examination  of  his  title  to  the 
property  he  mortgages.  If  he  borrows  more  than  one 
share,  he  is  taxed  a  proportionate  amount  for  each  addi- 

[129] 


CHAPTER  XIV. 

tional  share.  This  rule  is  manifestly  unjust  to  attorneys, 
for  it  requires  as  much  time  and  work  to  make  an  exam- 
ination of  a  title  if  but  a  single  share  is  borrowed  on  it, 
as  if  it  were  security  for  ten  or  twenty  shares.  Since  the 
examination  of  titles  requires  care  and  involves  respon- 
sibility, an  attorney  should  have  a  good,  reasonable  fee. 

For  instituting  and  defending  suits,  and  any  other 
unusual  legal  business,  special  fees  should  be  fixed  by  the 
directors. 

BONDS  OF  OFFICERS. 

It  is  customary  to  require  bonds  from  certain  officers 
of  associations.  Where  the  statutes  give  no  direction  in 
this  matter  it  should  be  fixed  by  the  association  itself  in  its 
constitution  and  by-laws.  The  particular  object  of  a 
bond  is,  to  enforce  responsibility,  especially  with  those 
officers  who  have  the  handling  and  custody  of  the  funds, 
or  of  any  officer  whose  trust  exposes  him  to  temptation 
and  the  association  to  the  possibility  of  loss.  The  by-laws 
or  rules  should  specify  which  officers  shall  give  bond  and 
the  amount  of  bond  required  in  each  case.  The  approval 
of  bonds  usually  rests  with  the  directors.  A  bondsman  is 
liable  only  to  the  extent  of  the  precise  terms  of  the  bond. 
All  officers  who  are  required  to  give  bond  should  have 
them  ready  at  the  first  meeting  after  their  election  and  hand 
them  in  at  that  time.  Bonds  should  be  carefully  drawn 
so  as  to  meet  all  legal  requirements.  Each  officer  who  is 
to  give  bond  should  furnish  at  least  two  first-class  sureties. 

The  president  should  give  a  bond  of  from  $2,000  to 
$4,000;    the  vice-president,  $2,000  to  $4,000;    the  sec- 

[130] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

retary,  $2,000  to  $5,000;  the  assistant  secretary,  $500  to 
$1,000 ;  the  treasurer,  $5,000  to  $10,000 ;  members  of 
appraising  committee,  $1,000  to  $3,000,  each;  the 
attorney,  $5,000  to  $10,000.  Members  of  special  com- 
mittees should  also  in  some  cases  give  bond  with  amounts 
in  proportion  to  the  duties  and  responsibilities  devolving 
upon  them. 

SURETY  BONDS. 

With  the  change  brought  about  by  the  organization  of 
companies  formed  for  the  purpose  of  offering  surety  to 
the  clients,  the  modern  method  has  been  to  have  the 
officials  of  building  associations  bonded  in  a  responsible 
bonding  or  surety  company.  These  companies  issue  bonds 
covering  the  association's  financial  affairs  from  any  loss 
on  embezzlement  of  any  of  its  officials,  at  a  stated  regular 
annual  premium.  The  expense  for  these  bonds  is  paid 
by  the  association,  and  the  form  of  bonds  issued  by  these 
companies  should  have  careful  investigation  by  the 
attorney  of  the  association  to  see  that  they  are  in  proper 
legal  form.  In  some  of  the  states  these  bonds  must  be 
filed  with  the  state  officials,  after  they  have  been  secured, 
to  keep  these  bonds  on  file  for  the  inspection  of  the  public 
and  for  their  protection.  In  those  states  where  this  is  not 
provided  for,  the  bonds  of  the  officers  are  usually  kept  in 
custody  by  the  secretary,  who  places  them  with  the 
other  papers  of  the  association,  excepting  that  of  his  own 
bond,  which  is  usually  held  by  the  president  of  the 
association. 


[131] 


CHAPTER  XIV. 

RESPONSIBILITIES  OF  OFFICERS. 

No  person  should  be  selected  as  an  officer  of  a  build- 
ing association  who  is  from  any  cause  disqualified  for  a 
faithful  discharge  of  the  functions  of  his  office.  Whoever 
accepts  a  position  as  an  officer  should  faithfully  and 
conscientiously  discharge  the  duties  imposed  upon  him. 
Hence,  by  agreement  among  the  members  of  an  associa- 
tion, certain  provisions  are  usually  made  in  the  constitu- 
tion or  by-laws  for  the  punishment  of  such  lapses  from 
duty  on  the  part  of  officers  as  are  not  of  a  criminal  char- 
acter. Thus  it  is  often  provided  that  the  officers  shall  be 
subject  to  fines  for  certain  classes  of  offenses  or  to  removal 
for  certain  other  ofTenses.  The  rules  may  be  so  drawn  as 
to  apply  to  cases  where  the  ofYense  is  not  directly  against 
the  interests  of  the  association  or  its  members,  but  may 
simply  affect  the  moral  character  of  the  officer  and  his 
standing  in  the  community,  thus  rendering  him  unpopular 
and  unfit  for  his  position  of  trust  in  the  association.  An 
officer  who  becomes  delinquent  in  his  position  as  a  mem- 
ber of  the  association,  may  be  considered  as  unfit  to  occupy 
a  place  as  an  officer.  The  power  of  fixing  penalties,  such 
as  fines  or  removal  from  office,  may  be  fixed  in  the  board 
of  directors,  or  may  rest  in  the  association  at  large.  The 
criminal  liability  of  officers  of  a  building  association  is  the 
same  as  that  of  officers  of  other  corporations  or  of  individ- 
uals generally.  No  man,  whatever  his  position,  is  per- 
mitted to  appropriate  to  his  individual  use  or  advantage 
that  which  is  not  his  own  or  to  which  he  has  not  obtained 
a  legal  right. 


[132] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

REMUNERATION  OF  OFFICERS. 

What  officers  shall  receive  compensation  is  determined 
by  the  provisions  of  the  constitution  and  by-laws.  It  is 
the  general  custom  to  leave  the  amount  of  compensation 
to  be  paid  to  the  different  officers  to  the  discretion  of  the 
directors  who  fix  the  amount  by  special  contract  with  the 
respective  officers.  When  the  salary  is  fixed  by  the  consti- 
tution or  by-laws  the  officer  may  claim  the  full  amount 
upon  the  strength  of  that  record  alone.  If  his  duties 
become  enlarged,  and  the  salary  is  then  inadequate  he  can- 
not claim  additional  compensation.  His  only  remedy  lies 
in  securing  a  change  in  the  rules  or  in  resigning  his  posi- 
tion. In  cases  where  compensation  is  not  fixed  by  the 
constitution  or  by-laws,  and  where  no  express  contract 
has  been  entered  into,  it  rests  in  the  discretion  of  the  board 
of  directors  as  to  whether  any  compensation  shall  be 
allowed  or  not,  and  to  what  amount.  It  should  be  borne 
in  mind  that  a  building  association  is  an  organization  for 
the  mutual  advantage  of  its  members,  and  the  fundamental 
idea  is  that  each  member  shall  work  for  the  benefit  of  all. 
On  this  account  it  is  expected  that  each  member  hold  him- 
self ready  to  contribute  his  personal  services  within  rea- 
sonable limits.  Therefore,  even  those  who  are  in  official 
position  are  expected  to  render  a  fair  proportion  of  service 
without  remuneration  and  that  they  are  to  be  compensated 
only  when  it  would  be  unjust  to  them  as  individuals  to 
expect  their  services  without  remuneration. 

A  salaried  officer  cannot  claim  extra  compensation  for 
work  done  in  the  line  of  his  duty.  Officers  must  look  only 
to  the  funds  of  the  association  for  their  remuneration,  and 

[133] 


CHAPTER  XIV. 

cannot  recover  the  amount  of  their  salaries  from  individ- 
ual members  or  directors. 

SALARY  OF  DIRECTORS. 

It  has  been  the  almost  universal  custom  that  directors 
should  serve  without  remuneration.  Lately  the  question 
of  allowing  them  pay  for  their  services  is  being  seriously 
considered.  Indeed,  in  some  associations  directors  are 
paid  for  their  services  either  directly  or  indirectly.  Some 
of  the  considerations  urged  in  favor  of  the  payment  of 
directors  may  be  mentioned.  Their  services  are  indispen- 
sable to  the  operations  of  an  association.  It  is  wholly 
impracticable  for  all  the  members  of  an  association  to 
come  together  at  each  meeting  and  attend  to  the  receiving 
of  money  and  all  its  routine  business  operations.  Even  if 
they  could  so  come  together,  it  would  be  impracticable  for 
such  a  body  to  do  such  work.  Many  of  them  do  not 
know  how  to  do  it,  and  so  many  coming  together  they 
would  simply  be  in  one  another's  way.  "What  is  every- 
body's business  is  nobody's  business." 

On  account  of  these  circumstances  associations  are  com- 
pelled to  delegate  authority  to  certain  selected  members  to 
attend  to  the  prosecution  of  their  business.  These  selected 
members  are  called  directors.  Because  certain  stock- 
holders are  selected  to  serve  in  the  capacity  of  directors 
does  not  make  it  any  more  possible  or  convenient  for  them 
to  attend  the  regular  meetings  to  look  after  the  business 
than  it  would  be  for  any  other  stockholder  not  so  selected. 
They  must  lose  their  time  and  comfort,  and  thus  interfere 
to  a  greater  or  less  extent  with  the  prosecution  of  their 

[134] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

own  private  business  and  interests.  Again,  those  stock- 
holders selected  to  act  as  directors  are  so  selected  because 
they  have  that  intelligence  and  knowledge  that  fit  them  to 
attend  to  such  business.  Intelligence,  knowledge,  and 
experience  are  valuable.  Hence,  other  things  being  equal, 
a  director's  time  is  likely  to  be  of  even  more  value  than 
that  of  the  average  stockholder. 

The  directors  being  charged  with  the  actual  manage- 
ment and  disposition  of  the  business  of  the  association, 
they  must  carry  a  responsibility  unknown  to  the  other 
stockholders.  The  directors  are  the  official  representa- 
tives of  an  association.  As  such  they  must  not  only 
execute  its  routine  business  but  must  represent  it  in  all 
incidental  matters  and  in  emergencies.  They  are  the 
sources  of  information  to  the  stockholders  and  to  out- 
siders. Their  work  on  committees  involves  them  in  many 
duties  outside  of  the  regular  meetings.  They  must  account 
faithfully  for  all  moneys  coming  into  the  possession  of 
the  association ;  they  must  keep  up  the  collections  and  act 
promptly  in  case  of  delinquents ;  they  must  make  deposits 
and  investments;  they  must  decide  upon  and  declare 
dividends;  they  must  pass  upon  premium  and  interest 
rates;  they  must  accept  or  reject  borrowers  and  mortgages 
and  other  securities;  they  are  compelled  to  keep  full 
records  of  all  their  doings  in  the  minute  and  account 
books.  That  every  matter  shall  have  due  attention  they 
are  compelled  to  bind  themselves  to  a  certain  order  and 
routine  in  what  they  do.  Finally,  they  are  required  to 
keep  their  members  informed  officially  by  regular  reports 

[135] 


CHAPTER  XIV. 

of  all  their  transactions,  and  of  the  condition  of  the  affairs 
of  the  association  in  full  detail. 

Many  members  of  associations,  not  having  had  experi- 
cence  as  directors,  and  not  being  close  observers  or  very 
thoughtful  about  the  matter,  do  not  appreciate  the  amount 
and  quality  of  service  required.  Indeed,  some  are  inclined 
to  look  upon  the  position  as  a  sinecure,  a  place  of  honor, 
and  to  be  sought  after  on  that  account. 

Although  directors  are  put  to  all  the  inconvenience  and 
labor  indicated  above,  they  have  no  more  share  in  the 
benefits  arising  therefrom  than  have  the  other  stock- 
holders. It  is  argued  that  an  association  is  a  business 
enterprise.  The  men  and  women  who  compose  the  mem- 
bership of  the  association  do  not  work  for  their  own 
employers  except  for  wages.  They  do  not  give  their  own 
services  without  pay.  On  the  other  hand  they  are  the 
employers  of  the  directors  of  their  associations.  Should 
they  require  their  own  employes  to  serve  without  pay  ? 

But  if  directors  are  to  be  paid  it  must  be  decided  how 
much,  and  upon  what  basis.  This  is  answered  in  a  general 
way  by  saying  that  it  must  be  only  for  services  actually 
rendered.  In  the  operations  of  an  association  each  officer, 
each  director,  has  an  assignment  of  actual  duties  to  per- 
form, and  if  paid  at  all  he  should  be  paid  in  proportion  to 
the  amount,  the  character,  and  the  responsibility  of  his 
work.  In  certain  private  corporations  it  has  become  the 
custom  to  pay  each  director  a  certain  stated  sum  for  each 
meeting  he  attends.  When  absent  from  a  meeting  he 
receives  no  pay.  It  is  argued  that  the  introduction  of  this 
system  into  the  operations  of  a  building  association  would 

[136] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

have  a  good  effect  in  two  ways.  First,  it  would  secure  the 
regular  attendance  of  directors;  second,  it  would  secure 
better  service  from  directors;  for,  by  regular  attendance 
upon  the  meetings  and  participation  in  the  business,  each 
director  will  have  a  better  understanding  of  all  the  plans 
and  details,  and  hence,  his  services  will  be  more  valuable. 
There  are  three  things  to  consider  in  fixing  the  amount 
of  remuneration,  if  it  should  be  decided  that  directors 
shall  be  paid.  The  pay  must  be  somewhat  in  proportion 
to  the  number  of  meetings,  the  amount  of  business 
transacted,  and  the  number  of  directors.  Three  proposi- 
tions have  been  made  in  this  connection :  ( 1 )  That  each 
director  be  paid  a  stated  sum  for  each  meeting  he  attends ; 
(2)  That  the  directors  be  paid  a  certain  per  cent  upon  the 
amount  of  business  transacted;  (3)  That  each  director 
be  paid  a  stated  salary  per  year  or  per  term  of  service. 
This  opens  up  a  large  field  for  discussion  which  it  would 
be  inappropriate  to  attempt  to  occupy  here.  This  one 
practical  suggestion  may  be  made,  to  wit : — Let  the  num- 
ber of  directors  be  adapted  to  the  actual  needs  in  the  trans- 
action of  the  business  of  the  association  just  as  in 
any  other  business  enterprise.  Let  the  number  of 
meetings  also  be  adjusted  so  as  best  to  meet  the 
requirements  of  the  association.  Then  upon  some  basis 
let  the  directors  be  paid  for  actual  services  rendered.  It 
will  certainly  happen  that  the  agitation  of  this  question 
will  lead  to  the  introduction  of  better  business  methods  in 
the  management  of  associations,  and  it  may  tend  to  lessen 
their  number,  to  concentrate  the  business  into  fewer  hands, 
to  fix  responsibility  more  closely,  and  possibly  to  the  estab- 

[137] 


CHAPTER  XIV. 

lishment  of  regular  offices  open  during  all  business  hours 
as  well  as  on  certain  evenings  for  the  transaction  of  busi- 
ness, the  same  as  in  banks  or  private  corporations,  and 
already  in  existence  in  some  building  associations. 

SALARY  OF  SECRETARY. 

What  is  said  above  does  not  apply  to  the  salary  of  the 
secretary.  The  salary  of  this  officer  should  not  be  based 
upon  the  work  done  in  the  meetings.  His  duties,  even  in 
this  respect,  are  very  exacting.  He  must  attend  all  meet- 
ings, keep  the  accounts  of  receipts  and  disbursements,  and 
also  the  minutes  of  the  proceedings.  But  much  the  greater 
portion  of  his  work  is  outside  of  the  meetings,  in  posting 
his  books,  calculating  dividends,  and  attending  to  the 
innumerable  details  connected  with  his  office.  It  is  very 
essential  that  a  secretary  should  be  competent  and  faith- 
ful, and  such  a  secretary  should  be  liberally  paid  for 
his  work. 


[138] 


CHAPTER  XV. 


Powers  and  Liabilities. 


GENERAL  POWERS. 

A  BUILDING  association,  being  in  the  nature  of  a  joint- 
stock  corporation,  possesses  the  general  powers  belonging 
to  corporations  of  that  class.  These  are  usually  laid  down 
in  the  statutes  of  the  different  states  about  as  follows : 

1.  To  have  perpetual  succession; 

2.  To  have  a  corporate  seal; 

3.  To  make  contracts  and  to  hold  real  estate  in  a  cor- 
porate capacity ; 

4.  To  sue  and  to  be  sued ;  and 

6.     To  make  rules  for  their  own  government. 

An  association  may  not  go  beyond  its  statutory  limita- 
tions and  privileges  and  assume  functions  and  preroga- 
tives not  granted  in  its  charter.  Such  action  would 
jeopardize  the  continuance  of  the  charter  itself  and  tend 
to  render  all  acts  of  the  association  invalid. 

PERPETUAL  SUCCESSION. 

The  right  of  perpetual  succession  is  essential  to  the 
purpose  of  the  association,  for,  though  the  membership 
and  the  officers  of  the  association  may  be  changed  more  or 
less  from  time  to  time,  the  association  itself  must  main- 

[139] 


CHAPTER  XV. 

tain  an  organic  existence  until  it  has  completed  its  course. 
Otherwise  it  would  be  impossible  for  such  an  organization 
to  carry  out  its  mission.  While  the  association  exists,  it 
remains  in  the  eye  of  the  law  an  entity,  notwithstanding 
any  changes  that  may  take  place  from  time  to  time  in  its 
elements. 

THE  CORPORATE  SEAL. 

The  seal  of  an  association  is  the  official  stamp  by  which 
the  papers  executed  as  a  part  of  its  official  business  are  to 
be  identified  and  verified.  The  seal  must  be  in  the  form  of 
a  stamp  which  will  make  an  impression  into  wax  or  paper. 
Its  custody  and  the  manner  of  its  use  should  be  prescribed 
in  the  rules  of  the  association.  The  affixing  of  the  seal 
to  an  instrument  should  be  accompanied  by  the  official 
signatures  of  the  president  and  the  secretary.  Some 
associations  require  the  signature  of  other  officers  also. 
There  has  been  much  litigation  in  reference  to  the  use  of 
corporate  seals,  and  the  rule  has  been  established  that 
"Wherever  the  law  requires  a  natural  person  to  attach  a 
seal  to  the  instrument  executed  by  him,  in  like  cases  only 
would  it  be  necessary  for  the  corporation  to  execute  a 
like  instrument  by  a  corporate  seal."  The  mistake  should 
not  be  made  that  an  association  is  not  liable  for  contracts 
that  are  not  verified  by  its  seal.  On  the  contrary  it  is 
liable  for  all  undertakings  that  are  expressed  or  implied 
by  its  acts. 

It  must  not  be  understood  that  every  association  is 
required  to  possess  a  seal.  The  possession  of  a  seal  is 
essential  only  when  required  by  the  statutes  or  the  constitu- 

[140] 


POWERS  AND  POSSIBILITIES. 

tion  of  the  association.  As  a  matter  of  fact  a  large  propor- 
tion of  the  associations  in  operation  do  not  use  seals. 

CONTRACTS  AND  AGENTS. 

An  association  may  make  contracts  and  purchases  and 
sales  directly  through  its  corporate  meeting.  But,  like 
other  corporations,  it  usually  acts  through  officers  and 
agents,  as  heretofore  explained  in  the  discussion  of  the 
duties  of  officers.  It  is  necessary  that  the  rules  provide 
fully  for  the  proper  execution  of  all  contracts,  that  they 
designate  the  manner  in  which  they  are  to  be  made,  and  the 
officers  who  are  empowered  to  act  for  the  association. 
When  officers  are  once  appointed  with  power  to  make  con- 
tracts then  the  general  laws  relating  to  the  subject  of 
agency  apply  to  associations,  their  agents,  and  third 
parties.  Concerning  appointments  of  agents,  it  has  been 
held  that  an  agent  may  act  without  written  authority,  or 
any  authentication  by  the  corporate  seal  of  an  association 
if  a  seal  is  used,  provided  his  appointment  is  regular  in 
other  respects ;  that  any  person,  even  a  minor,  may  by  due 
appointment  become  an  agent  of  an  association ;  and  that, 
in  certain  cases,  a  member  of  an  association  as  its  agent 
may  deal  with  himself  or  with  himself  as  the  agent  of  a 
third  party,  provided  no  special  advantage  is  secured  on 
either  side  through  the  arrangement. 

Since  the  appointment  of  the  officers  of  an  association  is 
a  matter  of  public  record,  third  parties  in  dealing  with 
them  must  satisfy  themselves  of  their  authority  to  act  as 


[141] 


CHAPTER  XV. 

agents.  So  long  as  agents  of  associations  act  within  the 
limits  of  the  authority  conferred  upon  them  the  associa- 
tion is  bound  by  their  acts.  If  an  agent  makes  contracts  in 
excess  of  his  authority,  they  may  afterwards  be  ratified 
and  accepted  by  the  association  or  its  board  of  directors. 
In  order  to  make  his  contracts  in  due  form  and  binding, 
an  agent  must  specify  in  the  papers  which  he  executes 
that  the  writing  is  done  by  the  hand  of  an  agent.  Notice 
properly  served  upon  an  agent  is  a  notice  to  the  principal 
in  the  transactions  for  which  he  is  employed.  A  notice 
conveyed  through  one  director  to  the  board  at  a  regular 
meeting  is  a  notice  to  the  association.  Or  a  notice  con- 
veyed to  any  director  while  engaged  in  the  business  of  the 
association  is  a  notice  to  the  association,  but  is  not  a  legal 
notice  if  given  to  him  when  not  so  engaged.  A  notice 
published  in  a  newspaper  is  not  a  legal  notice  unless  it 
relates  to  matters  required  to  be  so  published.  Private 
knowledge  on  the  part  of  a  director  or  officer,  obtained 
from  rumor  or  in  any  other  accidental  way,  cannot  be 
regarded  as  an  official  notice  to  the  association.  A  new 
board  of  directors  is  presumed  to  know  all  the  facts  and 
circumstances  known  by  or  communicated  to  the  previous 
board.  An  officer  or  agent  of  an  association  cannot 
delegate  his  authority  to  another  person,  except  where 
some  special  provision  is  made  to  that  end. 


[U2I 


POWERS  AND  POSSIBILITIES. 

SUITS. 

As  a  necessary  result  of  its  power  to  make  contracts 
an  association  has  the  right  to  enforce  such  contracts  by 
suit  if  necessary.  On  the  other  hand  as  a  party  to  these 
contracts,  the  association  itself  is  liable  to  legal  process 
for  the  violation  of  any  of  its  obligations.  An  association 
may  bring  suit  against  individuals  or  corporations  to 
enforce  its  legal  and  equitable  rights;  and  may  in  like 
manner  bring  suit  against  its  own  delinquent  officers  and 
members.  On  the  other  hand  it  is  liable  to  be  sued  by 
outsiders  or  by  its  own  officers  and  members  for  any 
actionable  neglect  or  delinquency  on  its  own  part. 

No  general  rule  can  be  given  for  the  issuing  of  processes 
for  and  against  building  associations,  since  the  require- 
ments vary  under  the  laws  of  the  different  states.  These 
legal  requirements  must  of  course  in  all  such  cases  be  care- 
fully observed.  Such  matters  should  be  attended  to  by  the 
attorneys  of  associations.  To  enter  upon  a  general  speci- 
fication and  discussion  of  the  grounds  upon  which  suits 
may  be  brought  by  or  against  associations  would  be  an 
undertaking  too  elaborate  and  foreign  to  the  purpose 
of  this  work.  These  matters  are  well  defined  under  the 
general  and  special  legislation  of  the  different  states. 

RULES. 

Two  general  principles  may  be  laid  down  concerning 
the  adoption  of  rules  for  the  government  of  an  association. 
The  first  is  that  the  rules  must  conform  to  the  constitu- 
tion and  laws  of  the  United  States,  and  also  of  the  state 
in  which  the  association  exists.    And  the  second  is  that 

[143] 


CHAPTER  XV. 

they  must  conform  to  the  purposes  for  which  the  associa- 
tion is  organized.  Forms  for  constitution  and  by-laws  are 
printed  in  the  appendix. 

SPECIAL  POWERS. 

Associations,  as  a  rule,  in  the  different  states  are  clothed 
with  certain  special  powers.  What  these  powers  may  be 
for  any  particular  association  in  any  particular  state  must 
be  learned  from  an  examination  of  the  statutes  in  that 
particular  state  and  of  the  charter  of  that  particular  asso- 
ciation. When  the  statutes  are  silent  upon  any  particular 
power,  neither  permitting  nor  prohibiting  it,  or  if  doubt 
exists,  the  legal  rights  of  an  association  in  the  premises 
may  be  determined  by  application  to  the  attorney  general, 
or  by  bringing  action  before  the  courts.  Among  the 
special  powers  which  an  association  may  or  may  not  pos- 
sess under  the  statutes  and  its  charter,  or  independent  of 
these,  are  the  rights  to  borrow  money,  to  acquire  and  to 
hold  real  estate,  to  build  houses,  etc.  But  some  special 
powers  are  conferred  upon  associations  generally,  such  as 
the  authority  to  impose  and  collect  fines.  To  determine 
the  special  powers  of  any  association  is  a  matter  for  legal 
inquiry,  and  in  all  cases  should  be  referred  to  the  proper 
legal  authorities. 

DISSOLUTION. 

In  the  case  of  a  terminating  association  it  becomes  dis- 
solved as  a  matter  of  course  at  the  expiration  of  the  time 
for  which  it  was  incorporated  and  its  charter  granted,  or 
when  its  stock  matures.     In  some  states  the  period  of 

[144] 


POWERS  AND  POSSIBILITIES. 

existence  is  fixed  by  the  statutes.  If  the  members  of  an 
association,  or  an  essential  portion  of  them  should  die,  it 
would  terminate  its  existence.  If  at  any  time  the  assets 
of  an  association  become  equal  to  the  par  value  of  all  its 
stock  it  ceases  to  exist,  except  so  far  as  winding  up  its 
affairs  is  concerned.  The  members  may,  by  unanimous 
agreement,  surrender  the  charter  of  an  association  and  its 
franchises.  It  has  been  held  that,  where  there  is  no  express 
provision  on  the  subject,  a  majority  of  the  members  may, 
by  resolution,  surrender  the  charter  and  dissolve  the  asso- 
ciation. But  they  cannot  do  this  against  the  resistance 
of  the  minority.  An  association  is  not  dissolved  by  mere 
neglect  or  indifference  on  the  part  of  the  members  which' 
leads  them  to  fail  in  the  discharge  of  their  duties. 

The  insolvency  of  an  association,  or  the  refusal  of  mem- 
bers to  keep  up  their  stock-payments,  or  the  omission  to 
elect  officers,  does  not  work  a  dissolution  of  the  associa- 
tion. Associations  may  be  dissolved  by  act  of  the  leg- 
islature or  decree  of  court,  where  such  dissolution  does  not 
impair  the  obligation  of  contracts.  Such  dissolution  is 
usually  brought  about  by  the  state  itself,  caused  by  the 
non-use  or  the  mis-use  of  the  franchises  of  the  association. 
In  all  cases  when  the  grant  of  the  charter  is  found  to  have 
been  defective  in  any  material  part,  or  when  it  has  been 
granted  to  persons  imperfectly  qualified  to  receive  it,  or 
upon  improper  representations,  it  is  competent  for  the 
state  to  rescind  its  action  and  to  dissolve  the  association. 
In  case  of  the  mismanagement  of  the  affairs  of  an  associa- 
tion, or  where  the  system  of  the  operation  is  such  as  to 
involve  losses,  the  courts  may,  upon  proper  application, 

[145] 


CHAPTER  XV. 

appoint  a  receiver  to  take  charge  of  its  affairs  and,  if 
necessary,  to  wind  it  up.  In  the  dissolution  of  an  associa- 
tion, or  the  winding  up  of  its  affairs,  many  questions  of 
equity  and  of  law  are  involved,  which  must  be  anticipated 
in  the  rules,  or  be  submitted  at  the  time  of  dissolution  to 
proper  judicial  or  legal  authority. 


[14«1 


CHAPTER  XVI. 


Practical  Questions  Answered. 


Explanatory  Note. — There  are  numerous  questions  which  con- 
tinually arise  in  reference  to  the  practical  workings  of  associations 
which  require  specific  answers.  A  number  of  the  more  important  of 
these  are  grouped  together  and  answered  in  this  chapter.  In  this  same 
connection  various  practical  suggestions  are  made  which  will  be  found 
of  value  in  the  transaction  of  the  actual  business  of  associations. 

BORROWING  MONEY. 

Who  may  borrow  f  It  is  generally  understood  that  none 
but  members  may  borrow  money  from  an  association. 
This  is  true,  but  it  sometimes  leads  to  a  misunderstanding. 
While  it  is  a  fact  that  only  members  may  borrow,  it  is  also 
true  that  any  person  may  become  a  member  at  any  time 
with  but  trifling  cost,  and  may  immediately  become  a  bor- 
rower. The  constitution  and  by-laws  of  an  association 
contain  the  terms  and  conditions  upon  which  its  money  is 
loaned,  and  are,  in  a  sense,  a  portion  of  the  contract  or 
agreement  between  the  borrower  and  the  association. 
Hence  the  necessity  of  every  borrower  becoming  a  member 
and  affixing  his  signature  to  the  constitution  and  by-laws. 
With  this  understanding  of  the  matter,  the  answer  may  be 
given  that  anybody  may  borrow  money  from  an  asso- 
ciation. 

[U7] 


CHAPTER  XVI. 

For  what  purpose  may  money  he  borrowed?  As 
indicated  in  a  previous  chapter,*  many  persons  suppose 
that  money  cannot  be  borrowed  from  a  building  associa- 
tion except  for  building  purposes.  As  there  explained,  an 
association  has  nothing  to  do  with  the  purpose  for  which 
money  is  borrowed.  The  sole  duty  of  the  association  is  to 
see  that,  in  making  the  loan,  it  is  protected  by  ample 
security.  A  member  therefore  may  borrow  money  for  any 
purpose  whatever. 

What  amount  may  he  borrowed?  The  financial  transac- 
tions of  an  association  with  its  members  are  always  based 
upon  shares.  Shares  are  for  different  amounts,  and  mem- 
bers are  allowed  to  own  different  numbers  of  shares  in 
different  associations.  But  the  question  may  be  answered 
in  a  general  way  by  saying  that  a  member  may  borrow  the 
full  amount  of  the  paid-up  value  of  the  shares  he  holds, 
or  any  part  thereof,  provided  the  security  he  offers  is  satis- 
factory. Thus,  if  the  shares  of  an  association  are  $500 
each,  and  a  member  is  a  subscriber  for  three  shares,  he 
may  borrow  $1,500  or  any  part  thereof.  But  in  order  to 
avoid  complications  in  accounts,  most  associations  have 
the  rule  that  money  must  be  borrowed  in  even  hundreds 
of  dollars. 

What  must  he  the  character  and  amount  of  security? 
This  is  determined  by  the  rules  of  associations.  Generally, 
however,  the  security  required  is  first  mortgage  on  real 
estate  in  the  county  where  the  association  operates,  or  an 
assignment  of  the  stock  of  the  association  on  which  there 
has  been  paid  in  more  than  the  amount  of  the  loan.    The 


See  Chapter  XII. 

[148] 


PRACTICAL  QUESTIONS  ANSWERED. 

rule  is  to  make  no  loans  on  property  already  encumbered, 
no  matter  how  valuable  the  property  or  small  the  encum- 
brance. But  the  money  borrowed  may  be  used  to  raise 
an  encumbrance  on  the  property  offered  as  security.  Some 
associations  accept  as  collateral  security,  government  and 
corporation  bonds,  first  mortgage  notes,  etc. 

An  association  will  usually  loan  money  to  the  amount 
of  about  two-thirds  of  the  value  of  the  property  offered  as 
security.  The  value  of  the  property  is  determined  by  an 
appraising  committee,  composed  of  members  of  the  board 
of  directors  of  the  association. 

What  is  the  cost  of  a  loan?  The  cost  of  a  loan  is  made 
up  of  the  incidental  expenses,  the  interest,  and  the  pre- 
mium, if  any  is  charged.  The  incidental  expenses  consist 
of  the  fees  for  appraising  property,  attorney's  fees  for 
examining  the  title  and  preparing  and  recording  the 
mortgage,  traveling  expenses  if  there  should  be  any,  and 
other  such  incidental  matters.  The  rate  of  interest  is  fixed 
in  the  rules  of  the  association,  and  is  generally  at  so  many 
cents  per  week  or  month  on  each  share  or  part  thereof 
loaned.  The  premium  is  the  amount  which  the  borrower 
bids  when  money  is  sold  for  the  privilege  of  borrowing. 
The  premium  is  in  the  form  of  so  many  cents  per  week 
on  each  share  or  part  thereof  borrowed,  in  addition  to  the 
rate  of  interest  fixed  by  the  rules  of  the  association.  The 
payment  of  one  cent  per  week  on  $100  is  equivalent  to 
about  one-half  per  cent  per  annum  interest.  With  this,  as 
a  basis,  there  will  be  but  little  difficulty  in  calculating  the 
cost  of  a  loan  when  interest  and  premium  are  combined. 


[149] 


CHAPTER  XVI. 

Some  associations  have  a  rule  to  the  effect  that  bor- 
rowers are  not  required  to  draw  out  the  entire  loan  at 
first  but  may  draw  it  in  installments  as  needed,  and  that, 
in  such  cases,  interest  will  be  charged  only  from  the  time 
that  the  money  is  actually  received.  This  arrangement  is 
an  especial  convenience  to  persons  who  are  building  and 
who  desire  to  make  payments  as  the  work  progresses.  It 
is  also  convenient  to  persons  who  have  obligations  to  meet 
at  stated  periods  as,  for  instance,  notes  in  bank  falling  due 
at  intervals.  They  can  in  this  way  use  their  money  in 
installments  without  risk  or  waste.  But  the  more  general 
rule  is  that  the  full  amount  of  interest  and  premium  is 
charged  up  from  the  time  the  loan  is  made  and  the  security 
is  given,  whether  all  the  money  is  drawn  out  at  that  time 
or  not,  provided  of  course,  that  the  money  is  on  hand  and 
ready  to  be  paid  to  the  borrower. 

How  are  loans  repaid?  As  stated  before,  loans  are 
based  upon  shares.  A  borrower  must  keep  up  his  regular 
'weekly  (or  monthly)  payments  of  dues,  and  in  addition 
to  this,  the  regular  weekly  (or  monthly)  installments  of 
interest  and  premium  as  they  fall  due.  We  will  suppose 
that  a  member  has  secured  a  loan  of  $1,000,  that  the 
regular  dues  are  $1.00  per  week  on  each  share  of  $500, 
that  the  regular  interest  is  12  cents  per  week  per  $100, 
and  that  the  premium  which  he  agreed  to  pay  is  at  the 
rate  of  2  cents  per  week  per  $100.  His  regular  weekly 
payments  therefore  would  be :  dues  $2.00,  interest  $1.20, 
and  premium  20  cents ;  total  $3.40.  If  payments  should 
be  made  monthly  instead  of  weekly,  there  would,  of 
course,  be  a  proportionate  increase.     The  amount  to  be 

[150] 


PRACTICAL  QUESTIONS  ANSWERED. 

paid  regularly,  however,  will  vary  from  time  to  time 
according  to  such  arrangements  as  the  borrower  may 
make.  In  some  associations  he  may  pay  more  or  less 
than  the  regular  amount  of  dues  per  week.  He  may  prefer 
to  pay  interest  and  premiums  in  advance.  When  this  rule 
holds,  the  amount  he  pays  in  goes  to  his  credit  upon  his 
shares  and  begins  to  draw  dividends,  which  are  usually 
compounded  semi-annually  the  same  as  are  all  other 
deposits.  The  greater  the  amount  he  pays  in  in  install- 
ments the  more  quickly  of  course  will  his  credits  and 
dividends  together  amount  to  the  $1,000  which  is  neces- 
sary to  pay  off  his  loan. 

How  much  time  is  required  to  pay  up  a  loan?  This 
will  depend  upon  four  things:  (1)  the  rate  of  interest; 
(2)  the  amount  of  the  regular  weekly  (or  monthly)  pay- 
ments; (3)  the  amount  of  premium;  (4)  the  amount  of 
dividends  earned  by  the  association. 

Where  the  rate  of  interest,  amount  of  premium,  and  the 
earnings  of  an  association  are  nearly  uniform,  then  of 
course  the  length  of  time  will  depend  simply  upon  the 
amount  of  the  payments. 

Advantages  of  a  Building  Association  Loan.  With 
many  a  person  it  is  easy  to  pay  off  a  loan  in  installments 
where  it  would  be  impossible  to  meet  the  entire  indebted- 
ness at  once.  Money  borrowed  from  private  persons  or 
corporations  is  usually  loaned  on  mortgage  for  one  year. 
At  the  end  of  the  year  it  must  either  be  paid  or  a  new  loan 
must  be  negotiated  which  involves  a  repetition  of  all  the 
original  trouble,  expense  and  anxiety.  The  time  when  a 
note  is  coming  due  which  is  secured  by  a  mortgage  on 

[151] 


CHAPTER  XVI. 

one's  home  is  not  a  pleasant  day  to  which  to  look  forward. 
It  so  often  happens  that  the  money  which  the  borrower 
thought  he  would  have  saved  up  against  the  evil  day  is  not 
forthcoming.  Indeed,  not  infrequently  the  borrower  finds 
difficulty  in  paying  even  the  interest.  In  borrowing  from 
a  building  association  all  this  annual  or  periodical  uneasi- 
ness is  avoided.  Each  week  or  month  takes  care  of  itself, 
the  burden  is  evenly  distributed,  and  one  can  readily 
regulate  his  habits  and  manner  of  life  to  conform  to  his 
necessities.  Week  by  week  the  regular  installments  are 
paid,  almost  without  feeling  them,  and  the  loan,  which 
would  otherwise  be  a  hardship  if  paid  in  one  sum,  is 
carried  and  ultimately  paid  off  with  ease. 

In  borrowing  from  an  association  a  member  should 
make  such  arrangements  for  his  payments  as  are  not 
likely  to  become  burdensome.  It  is  better  to  arrange  to 
make  them  as  low  as  is  consistent  with  safety.  Then  if, 
from  time  to  time,  the  borrower  finds  that  he  can  pay  more 
than  the  agreed  amount  let  him  do  so.  And  the  amount 
thus  paid  in  in  advance  will  not  only  stand  to  his  credit 
but,  in  many  associations,  will  draw  dividends  in  his  favor. 
Moreover,  by  thus  getting  some  distance  ahead  with  his 
payments,  in  case  of  sickness,  loss  of  work,  or  some  other 
misfortune,  he  may  cease  making  payments  for  a  time 
without  falling  into  arrears  or  being  in  danger  of  losing 
his  property. 

If  a  borrower  unexpectedly  finds  himself  able  at  any 
time  to  pay  off  all,  or  a  considerable  portion  of  his  loan, 
it  is  better  for  him  to  do  so.  He  not  only  relieves  himself 
of  an  obligation  by  doing  so  and,  in  most  cases  stops  his 

[152] 


PRACTICAL  QUESTIONS  ANSWERED. 

interest,  but  he  puts  himself  in  such  position  that  he  may 
begin  to  accumulate  money  for  himself  which  may  be 
profitably  invested  in  the  association  or  in  some  other  way. 

CONTINGENT  OR  RESERVE  FUND. 

Provision  for  a  reserve  fund  is  fixed  by  statute  in  nearly 
all  of  the  states  and  territories.  The  amount  usually  pre- 
scribed by  the  law  of  the  various  states  has  been  fixed  at 
five  per  cent  of  the  assets  of  the  association.  Many  of  the 
leading  authorities  are  of  the  opinion  that  this  should  be 
increased  to  ten  per  cent.  The  good  results  secured  from 
the  establishment  of  a  reserve  fund  are  seen  in  the  practical 
operation  of  this  idea  in  the  state  of  Ohio.  In  1891  a  law 
was  passed  specifically  providing  for  this  fund.  Five  per 
cent  was  to  be  set  aside  annually  of  the  net  profits,  until 
the  amount  of  five  per  cent  of  the  loans  had  been  reached. 
The  result  has  been  that  the  majority  of  the  associations 
in  this  state  have  now  reached  this  point  and  many  of 
them  have  even  a  larger  amount  placed  aside  for  the  con- 
tingent fund.  The  money  placed  in  this  fund  is  loaned 
out,  as  are  the  other  funds  of  the  association,  so  that  the 
members  have  an  adequate  protection,  and  at  the  same 
time  receive  an  income  from  this  source.  In  many  of  these 
associations  a  sufficient  income  is  derived  therefrom  to 
cover  the  operating  expenses.  Thus  it  will  be  seen  that 
the  membership  of  an  association  having  an  interest  in 
this  fund  will  become  a  more  permanent  one  than  that 
association  which  has  no  such  provision. 


[153] 


CHAPTER  XVI. 

UNDIVIDED  PROFITS. 

In  the  periodical  apportionment  of  the  profits  of  the 
association  there  is  nearly  always  a  little  residue  left  over, 
from  the  fact  that  it  is  a  very  laborious  undertaking  to 
calculate  and  divide  the  gains  down  to  a  very  small  frac- 
tional part.  The  custom  is  to  fix  the  dividend  at  such  a 
rate  as  approximates  closely  to  the  gains  of  the  associa- 
tion, but  which  may  be  expressed  either  by  a  whole  num- 
ber or  a  mixed  number  in  which  the  fraction  is  of  a  con- 
venient denomination  to  use  in  calculations.  To  illustrate : 
The  actual  gains  of  an  association  might  be  5  "^Vioo  per 
cent.  Assuming  that  J^  of  one  per  cent  is  placed  to  the 
credit  of  the  contingent  fund,  this  would  leave  5  Vioo  per 
cent.  To  calculate  the  dividends  of  each  member  at  this 
rate  would  put  upon  the  secretary  a  large  amount  of  very 
laborious  figuring  and  involve  no  little  liability  to  error. 
To  avoid  this  the  rate  of  the  dividend  would  probably  be 
fixed  at  5  per  cent.  This  leaves  ®/ioo  of  one  per  cent  of  the 
profits  for  that  term  which  are  undivided.  Also  in  the 
calculations  there  will  be  some  small  undivided  profits. 
Some  associations  pass  these  fractional  portions  of  un- 
divided profits  to  the  credit  of  the  contingent  fund ;  others 
place  them  in  what  is  called  the  undivided  profit  account. 
When  these  are  carried  in  the  latter  way  the  amounts 
left  over  from  period  to  period  should  be  added  to  the 
gains  for  each  closing  period  before  the  dividends  are 
declared.  Where  the  undivided  profits  are  passed  to  the 
credit  of  the  contingent  fund,  they,  of  course,  become 
liable  to  all  the  conditions  covering  that  fund. 

[154] 


PRACTICAL  QUESTIONS  ANSWERED. 

The  new  Ohio  law  provides  for  the  establishment  of 
an  undivided  profit  account  which  has  been  of  great 
service  to  the  associations. 

QUICK  ASSETS. 

Among  the  innovations  in  the  work  of  the  building, 
loan  and  savings  associations  is  that  institutions  have 
been  compelled  to  modernize  to  meet  the  demands 
of  their  membership.  With  the  growth  of  these  associa- 
tions, the  necessity  of  having  available  securities  at  the 
time  of  industrial  depression  or  other  causes,  securities 
which  would  be  found  marketable,  the  desire  has 
been  to  invest  a  certain  portion  of  the  assets  in  so- 
called  "quick  assets,"  such  as  government  or  municipal 
bonds.  In  some  states  legislation  has  been  passed  permit- 
ting the  associations  to  invest  a  certain  percentage  of  their 
total  assets  in  such  securities.  This  naturally  means  that 
the  income  yield  from  this  line  of  investment  will  be  less 
than  that  made  upon  the  real  estate  holdings  which  are 
productive  of  better  results,  but  experience  has  proven  the 
necessity  of  this  change.  In  our  opinion,  associations 
should  carry  at  least  ten  per  cent  of  their  total  assets  in 
these  securities. 

MORTGAGES:     CUSTODY,  RECORDING,  ETC. 

Mortgages  should  be  placed  upon  the  records  of  the 
county  in  which  the  mortgaged  property  is  located.  This 
should  be  done  immediately  after  their  execution  in  order 
to  secure  the  proper  priority  of  lien.  One  of  the  officers 
of  the  association    (president,   secretary,  or  treasurer) 

[155] 


CHAPTER  XVI. 

should  be  entrusted  with  this  duty.  It  is  advisable  to 
provide  this  officer  with  a  book  containing  certificates  of 
record  to  be  signed  by  the  recorder,  clerk,  or  prothonotary, 
with  whom  the  mortgage  is  left  for  recording.  The  blank 
for  these  certificates  should  be  about  as  follows : 

Received  for  record ., 191 . .  at  . .  .o'clock. . . 

minutes M.  from  The Building  and  Loan  Associa- 

tion>  a  mortgage  given  by to  said  associa- 
tion,  dated 191 . . 


of County, 

When  a  mortgage  has  been  fully  satisfied  it  should 
be  discharged  forthwith  by  a  certificate  of  satisfaction  by 
the  president ;  or  president  and  secretary,  as  the  rule  may 
be,  for  entry  upon  the  county  records.  If  this  certificate 
is  indorsed  upon  the  back  of  the  mortgage  it  may  be  in 
this  form : 

The  foregoing  and  within  mortgage  has  been  fully  paid  and  satis- 
fied and  the  recorder  (clerk,  or  prothonotary,  as  the  case  may  be) 
is  hereby  authorized  to  cancel  the  same  off  of  the  records  of 
County, 

The Building  and  Loan  Association, 

By ,  President 

,  Secretary. 

If  the  certificate  of  satisfaction  is  upon  a  separate  sheet 
it  must  contain  an  accurate  description  of  the  mortgage 
designated  for  cancellation  with  the  number  of  the  mort- 
gage book  and  the  page  where  the  same  is  recorded. 

[156] 


PRACTICAL  QUESTIONS  ANSWERED. 

The  mortgages  held  by  an  association  should  not  be 
left  in  the  possession  of  any  one  of  the  officers,  since  this 
places  a  needless  and  irksome  responsibility  upon  such 
officer,  and  since,  in  such  custody,  they  might  be  liable 
to  be  lost  or  mislaid.  They  should  be  placed  in  the  fire- 
proof safe  of  the  association  if  it  has  one ;  if  it  has  none 
they  ought  to  be  deposited  in  the  safe  of  some  bank  or  in  a 
safe-deposit  vault,  even  if  a  small  expense  be  incurred 
thereby.  The  mortgages  as  filed  away  should  be  properly 
arranged,  either  alphabetically  according  to  the  names  of 
the  mortgagors,  or  in  numerical  order  corresponding  with 
the  numbers  of  the  members  or  shareholders  executing 
them,  so  that  any  particular  mortgage  may  be  found 
readily. 

If  a  fire  insurance  policy  is  held  as  collateral  to  the 
mortgage,  the  policy  should  be  filed  with  the  mortgage, 
a  band  or  string  holding  the  two  papers  together  or  both 
being  enclosed  in  an  envelope. 

INSURANCE  POLICIES  AS  COLLATERAL  SECURITY- 

In  all  cases  where  the  value  of  the  land  mortgaged 
is  not  sufficient  to  secure  the  loan,  and  there  are  buildings 
upon  the  land  which  are  included  in  the  mortgage,  fire- 
insurance  policies  on  these  buildings  should  be  required. 
These  policies  should  be  assigned  to  the  association.  But 
in  cases  where  the  value  of  the  land  is  evidently  sufficient 
to  cover  the  amount  of  the  loan,  including  interest  and 
costs  of  suit  in  case  of  a  foreclosure,  less  the  amount 
already  paid  in  by  the  shareholder,  it  is  not  only  unreason- 
able to  require  the  assignment  of  a  fire  insurance  policy 

[157] 


CHAPTER  XVI. 

but  it  also  makes  needless  work  for  the  officers  of  the 
association  having  charge  of  insurance  matters. 

It  should  be  made  the  duty  of  the  secretary  or  of  some 
other  officer  to  keep  a  record  of  all  the  fire  policies  held  as 
collateral  security.  This  record  should  include  the  name 
and  address  of  the  company  or  of  the  agent  issuing  the 
policy  and  a  sufficient  description  of  the  policy  itself  to 
make  it  easily  recognizable.  The  record  should  be  indexed 
with  the  names  or  numbers  of  the  shareholders  assigning 
the  policies  so  that  reference  may  be  made  to  each  readily. 
The  record  of  policies  should  also  be  arranged  in  monthly 
groups  showing  when  the  policies  expire. 

The  month  before  the  expiration  of  a  policy  the  officer 
having  charge  of  this  matter  should  notify  the  mortgagor 
of  the  approaching  expiration  of  his  policy  and  request 
that  it  be  renewed  on  or  before  the  meeting  day  next  pre- 
ceding its  expiration.  At  this  meeting  the  certificate  of 
entry  of  renewal  duly  signed  by  the  agent  or  representa- 
tive of  the  insurance  company  must  be  furnished  to  said 
officer  of  the  association.  When  an  entry  on  the  policy  by 
the  representative  of  the  insurance  company  is  required, 
the  policy  should  be  delivered  to  the  mortgagor  for  that 
purpose  to  be  returned  at  the  meeting  as  before  stated. 

If  a  borrower  shall  pay  off  a  portion  of  his  loan,  reduc- 
ing it  to  such  an  extent  that  the  land  covered  by  his  mort- 
gage independent  of  the  buildings  thereon  is  sufficient 
security  for  the  loan,  then  his  fire  policy  should  be  returned 
to  him  with  the  proper  certificate  of  satisfaction  and 
relinquishment  either  endorsed  upon  the  policy  itself  or 

[158] 


PRACTICAL  QUESTIONS  ANSWERED. 

upon  a  special  blank  for  that  purpose.     If  endorsed  upon 
the  policy  it  may  be  in  these  words : 

191.. 

The    security    for    which    this    policy    has    been    held    by    The 

Building  and  Loan  Association  is  hereby 

relinquished. 

,  President, 

,  Secretary. 

The Buildin-g  and  Loan  Associatioik 

When  a  special  blank  is  used  it  must  give  the  number 
and  the  date  of  the  policy  and  the  name  of  the  insurance 
company  issuing  it,  in  addition  to  the  words  signifying 
relinquishment. 

If  a  loan  is  secured  by  mortgage  on  a  terminating  lease- 
hold the  policy  of  insurance  should  be  held  as  collateral 
until  the  final  satisfaction  of  the  mortgage.  Then  the 
policy  with  the  mortgage  should  be  surrendered  with  the 
proper  certificate  of  satisfaction  as  above. 

LEASEHOLDS. 

When  a  leasehold  is  mortgaged  to  an  association  thtf 
secretary  or  other  officer  whose  duty  it  may  be  should 
enter  in  a  book  kept  for  that  purpose  a  copy  of  the  for- 
feiture clause  of  the  lease ;  likewise  the  dates  when  ground 
rents  become  due,  arranged  in  monthly  groups  as  indicated 
above  for  the  insurance  policies.  Receipts  for  the  payment 
of  the  rental,  taxes,  and  assessments,  if  any,  should  be 
presented,  at  the  latest,  at  the  meeting  preceding  the 
expiration  of  the  term  of  forfeitures  and  the  entry  that 

[159] 


CHAPTER  XVI. 

such  receipts  have  been  produced  should  be  made  on  the 
book  of  the  proper  officer. 

TAXES  AND  ASSESSMENTS. 

Mortgagors  should  be  required,  subject  to  penalties 
fixed  by  the  rules,  to  present  to  the  proper  officers  of  the 
association  their  tax  or  assessment  receipts  at  the  farthest 
within  one  month  after  the  last  day  when  they  were  pay- 
able. An  entry  should  be  made  in  a  book  kept  for  that 
purpose  to  the  effect  that  such  a  receipt  was  duly  produced. 

PAYMENT  OF  DIVIDENDS. 

It  is  the  practice  in  some  associations  for  the  members 
to  draw  out  their  dividends  at  the  end  of  each  term.  This 
is  probably  a  bad  rule.  Associations  are  organized  for  the 
purpose  of  enabling  and  encouraging  their  members  to 
save  money.  If  the  members  draw  out  their  dividends 
regularly  they  are  apt  to  expend  this  money  which  they 
might  otherwise  save.  Unless  a  member  absolutely  needs 
his  dividends  it  is  better  for  him  to  allow  them  to  stand  to 
his  credit.  In  associations  where  the  dividends  are  not 
drawn  out  they  usually  are  compounded  from  term  to 
term  and  thus  assist  materially  in  increasing  a  member's 
income.  It  is  an  advantage  to  the  association  also  for  the 
dividends  to  be  left  in  the  treasury.  In  an  average  asso- 
ciation doing  a  prosperous  business,  the  semi-annual 
dividends  will  amount  to  a  considerable  sum  which  can 
be  profitably  loaned  or  invested  by  the  association. 

But  where  the  dividends  are  paid  at  the  end  of  each 
term  the  directors  must  make  special  provision  to  have 

[160] 


PRACTICAL  QUESTIONS  ANSWERED. 

the  money  on  hand  with  which  to  pay  them.  If  dividends 
are  not  forthcoming  when  expected,  suspicions  may  arise 
and  there  may  be  a  loss  of  confidence  among  the  members. 
In  paying  dividends  *  it  is  convenient  to  have  each 
member's  money  or  check  placed  in  an  envelope  before- 
hand so  that  on  the  meeting  night  it  can  be  handed  to 
him  without  any  delay.  The  envelope  may  be  printed 
about  as  follows: 

Book  No 

Dividend   of 

The   

Building  and  Loan  Association  for  term  ending 

191.. 

Name    

Amount  $ 

As  these  envelopes  containing  the  dividends  are  dis- 
tributed to  the  members  each  member  should  sign  a  receipt 
in  the  following  form : 

191... 

Received  of  The 

Building  and  Loan  Associations  the  sum  of 

dollars  in  full  for  dividend  for  term  ending 

191.. 


Book  No. 


For  roethods  of  calculating  dividends  and  dividend  tables  see  Chapter  XXI. 
[161] 


CHAPTER  XVI. 

These  receipts  may  be  loose,  or  bound  in  book  form. 
If  loose,  after  they  have  been  signed,  they  should  be  filed 
either  in  the  numerical  order  of  the  members'  pass-books, 
or  in  the  alphabetical  order  of  the  members'  names,  so  that 
they  can  be  referred  to  readily. 

Some  associations  pay  dividends  by  issuing  warrants 
upon  the  Treasurer  who  cashes  them  on  presentation. 
These  warrants  are  in  the  following  form : 

No 

191.. 

Treasurer  of 

The Building  and  Loan  Association : 

Pay  to  the  order  of i. .  .the  sum  of 

dollars,  dividend  in  full  for  term 

ending. 191. . 

$ Secretary. 

In  some  states  the  statutes,  and  in  many  associations  the 
rules,  require  that  all  moneys  shall  be  deposited  in  bank 
and  paid  by  check. 

DUES,  DEPOSIT  SLIPS,  ETC. 

At  the  appointed  time  for  the  payment  of  dues  the 
tables  should  be  cleared  and  conveniently  arranged.  The 
secretary  and  his  assistants  and  the  finance  committee 
should  take  proper  position.  The  dues  book  should 
lie  open  in  the  most  convenient  place  for  use  by  the 

[162] 


PRACTICAL  QUESTIONS  ANSWERED. 

secretary  or  other  person  receiving  the  payments,  and  for 
reference  by  his  assistants  and  the  members  of  the  finance 
committee.  Regular  money  boxes  should  be  provided  for 
assorting  and  depositing  the  money  as  received. 

It  will  greatly  facilitate  business  if  associations  will 
use  deposit  slips  or  deposit  envelopes.  These  are  also  of 
great  advantage  and  convenience  in  checking  up  for  any 
errors  which  may  arise. 

PAYING  OFF  SHARES. 

Before  the  directors  pay  up  shares  in  full  or  relinquish 
mortgages,  they  should  consider  carefully  the  association's 
liabilities  so  that  they  may  know — 

1.  What  losses  are  liable  to  occur ; 

2.  What  mortgages  are  likely  to  prove  bad ; 

3.  What  inside  creditors  the  association  has ; 

4.  Whether  or  not  the  existing  reserve  fund  is  suf- 
ficient to  cover  all  such  liabilities. 

Thus  the  directors  may  protect  the  association  from  any 
possible  shortage.  In  case  of  withdrawal  at  any  time  when 
losses  are  pending,  the  shares  withdrawn  should  be  debited 
with  their  equitable  proportion  of  the  impending  liability. 
If  this  is  not  made  the  rule  knowing  members,  when  the 
association  may  be  under  threatened  temporary  embarrass- 
ment, would  withdraw  their  shares  and  escape  without 
losses,  while  the  faithful  and  unsuspicious  members 
remaining  over  would  be  compelled  to  meet  the  emergency. 

It  must  not  be  imagined  that  this  prudence  is  unneces- 
sary because  of  the  fact  that,  generally  speaking,  building 
associations  conducted  on  the  permanent  plan  are  pros- 

[163] 


CHAPTER  XVI. 

perous  and  run  along  smoothly  from  year  to  year  without 
embarrassment.  Unexpected  circumstances  may  arise  in 
the  affairs  of  an  association  just  as  in  any  other  business 
enterprise.  The  officers,  through  inexperience  or  careless- 
ness, may  make  mistakes.  A  neighboring  association  may 
declare  large  dividends.  Then  the  officers  think  that  their 
own  association  can  do  as  well,  and  will  increase  their  own 
dividends  and  pay  out  for  profits  more  than  the  associa- 
tion has  earned.  Any  increase  in  dividends  has  a  very 
pleasing  and  quieting  effect  upon  members.  As  a  result 
the  members  themselves,  under  such  circumstances, 
become  more  careless,  and,  in  consequence  without  any 
evil  intent  on  the  part  of  either  officers  or  members,  unex- 
pected embarrassment  may  arise.  It  is  well  to  anticipate 
all  such  emergencies  beforehand,  and  thus  to  be  prepared 
for  them.  It  is  easy  to  under-estimate  an  association's 
liabilities  to  borrowing  members  on  the  one  hand,  and  to 
over-estimate  the  value  of  mortgages  on  advanced  shares 
on  the  other. 

Another  serious  mistake  which  has  often  been  made, 
principally  in  associations  conducting  their  business  on 
the  gross  plan,  is  to  divide  the  profits  at  the  end  of  the  first 
term.  If  this  is  done  a  member  coming  in  during  the 
second  term  would  afterwards  have  no  share  of  certain 
profits  to  which  in  the  course  of  time  he  would  be  justly 
entitled.  In  some  reports  unearned  premiums  and 
unearned  interest  will  be  found  reckoned  as  assets.  This 
is  certainly  a  mistake  since  in  each  new  term  these  assets 
must  be  reduced  by  the  amount  which  must  be  placed  to 
the  credit  or  profits  for  that  term. 

[164] 


PRACTICAL  QUESTIONS  ANSWERED. 

In  some  instances  we  have  found  reported  as  assets  the 
entire  outstanding  re-payments  having  an  unexpired  term, 
without  any  reduction  or  discount  being  made  for  the  time 
that  must  elapse  before  they  shall  be  paid. 


[165] 


CHAPTER  XVII. 


Auditing:  Its  Necessity  and  Object. 


STATE  EXAMINATIONS. 

In  many  of  the  states  the  provisions  of  the  law  require 
examinations  to  be  made  at  specified  times.  While  the 
auditing  done  by  the  state  authorities  has  been  of  untold 
benefit  to  the  movement,  we  are  of  the  opinion  that  the 
associations  themselves  should  pay  the  greatest  attention 
to  this  important  detail  of  the  management  of  these  asso- 
ciations. When  we  consider  the  vast  number  of  associa- 
tions, embracing  a  membership  of  over  two  million  people 
who  make  weekly,  semi-monthly  and  monthly  deposits, 
running  into  the  millions,  the  total  aggregate  savings  are 
tremendous.  This  vast  sum  of  money  represents  the 
hard-earned  savings  of  thrifty  and  frugal  citizens,  whom 
circumstances  compel  to  begin  at  the  bottom  of  the  ladder 
in  the  competition  for  material  progress.  They  are  of  the 
class  of  people  who  can  least  afford  to  run  any  risk  or 
suffer  any  loss.  The  money  they  are  thus  accumulating* 
they  are  compelled  to  earn  by  the  sweat  of  their  brows. 
It  is  not  interest,  rent  or  incomes  from  accumulated  capital 
or  investments.  It  is  in  most  cases  their  dependence  for 
the  future,  as  well  as  the  home  itself,  and  for  the  neces- 
sities and  comforts  of  life.     If  there  is  such  a  thing  as 

[166] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

sacred  money  anywhere,  it  is  in  these  very  treasuries  of 
the  building,  loan  and  savings  associations.  Many  a  tim^ 
a  person  who  has  lost  some  of  these  savings  has  been  dis- 
couraged from  ever  again  attempting  a  similar  effort.  As 
a  result,  this  burden  must  be  assumed  by  others.  The 
proper  guardianship  and  protection  of  these  funds  is, 
therefore,  a  matter  of  the  highest  importance.  It  should 
have  the  best  wisdom  of  the  association  and  of  the  state 
for  its  practical  direction.  In  a  report  of  the  Bureau  of 
Statistics  of  Labor  and  Industry  in  New  Jersey,  the  part 
devoted  to  building  and  loan  associations  makes  the  fol- 
lowing comment  in  regard  to  auditing : 

"In  theory,  the  co-operators  are  neighbors  and  acquaintances, 
present  at  every  periodical  meeting  and  watching  and  auditing  the 
modest  business  transactions  themselves.  And  probably  that  was,  in 
the  early  history  of  the  association,  also  largely  carried  out  in 
practice.  It  is  more  or  less  so  in  the  smaller  concerns.  In  the  com^ 
paratively  large  enterprises,  and  especially  those  where  the  number 
of  membership  reaches  several  hundred  or  even  a  thousand,  and  the 
assets  approximate  a  quarter  of  a  million,  such  a  course  is  hardly 
practical.  The  examinations  of  accounts  and  investments  is  usually 
left  to  auditors  who  often  know  little  about  auditing,  and  even  wheo 
competent,  are  inclined  to  neglect  making  a  thorough  investigation 
which  requires  valuable  time." 

Since  this  was  written  several  associations  in  the 
United  States  have  acquired  a  membership  approaching 
twenty  thousand,  with  assets  aggregating  about  five  mil- 
lion dollars,  and  the  number  of  associations  having  over  a 
million  dollars  assets  is  increasing  continually.  Thus 
it  will  be  seen  that  the  volume  of  business  has  grown 
phenomenally,  especially  in  well  conducted  associations 
where  they  have  made  it  a  business  to  work  along  progres- 
sive lines. 

[167] 


CHAPTER  XVII. 

The  grave  importance  of  the  subject  of  auditing  is 
indicated  in  the  extract  quoted,  and  in  some  of  the  figures 
given.  This  matter  should  receive  the  greatest  considera- 
tion in  association  circles.  In  fact,  a  single  association 
that  has  trouble  in  any  part  of  the  United  States  will 
cause  uneasiness  at  some  other  point,  and  it  therefore 
behooves  those  having  the  management  of  associations  in 
charge  to  see  that  the  very  best  auditing  obtainable  is 
secured  for  their  respective  institutions.  An  ordinary 
business  enterprise  is  usually  carried  on  by  an  individual, 
a  firm  or  a  private  corporation.  In  such  cases  the  actual 
managers  of  the  business,  as  a  rule,  carry  a  large  part  of 
the  risk.  It  is  their  own  money  that  is  invested  in  the 
business.  They  invest  this  according  to  their  own  judg- 
ment, and  handle  the  business  at  their  own  discretion.  In 
consequence  they  are  naturally  watchful  and  painstaking 
in  all  they  do,  their  time  and  thought  being  devoted  to  the 
business.  If  the  business  prospers,  well  and  good.  But 
if  they  find  that  it  is  not  prospering  they  may,  without 
consulting  anyone,  proceed  to  close  it  up. 

In  the  management  of  a  building  association  the  condi- 
tions are  different.  The  directors  and  officers  have  some 
financial  interest  in  it,  but  this  interest  is  likely  to  be  of 
minor  importance  as  compared  with  their  other  and  out- 
side individual  interests,  and  it  is  also  unimportant  as 
compared  with  the  aggregate  interest  of  the  association. 
The  case  is  different  in  the  management  of  any  private 
individual  enterprise,  or  of  the  business  of  any  regular 
business  firm  or  corporation.  In  a  private  enterprise  the 
managers   give  to   the   business   their   whole   time  and 

[168] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

thought.  In  the  management  of  the  business  of  a  building 
association  it  is  only  incidentally  that  time  and  thought 
are  given  to  it.  Let  the  officers  of  an  association  be  ever  so 
conscientious,  ever  so  much  interested,  nevertheless  the 
opportunities  for  error  are  greater  in  an  associated  than 
in  a  private  enterprise.  An  association's  business  is  open 
to  many  more  risks  of  the  misuse  or  non-use  of  powers 
on  the  part  of  managers  than  is  the  case  where  proprietary 
interests  are  involved  and  the  management  is  embodied  in 
one  or  a  few  men  whose  duty  and  interest  it  is  to  make  it 
their  sole  occupation  to  watch  over  and  administer  their 
own  affairs. 

These  facts  give  rise  to  a  special  necessity  for  the  sys- 
tematic and  regular  auditing  of  the  accounts  of  every 
co-operative  enterprise.  This  necessity  is  of  a  dual  and 
reciprocal  nature.  It  is  due  on  the  one  hand  for  the  pro- 
tection of  the  society's  interests  and  the  individual 
interests  of  the  members.  On  the  other  hand  it  is  neces- 
sary for  the  protection  and  proper  endorsement  of  the 
officers  in  the  discharge  of  their  duties. 

Indirectly  also  another  important  reason  exists  for  the 
careful  administration  and  auditing  of  the  affairs  of  every 
building  association.  It  is  only  by  such  systematic  watch- 
fulness that  the  best  success  and  prosperity  of  an  associa- 
tion can  be  secured  and  assured.  Any  failure  of  an  asso- 
ciation, be  it  complete  or  partial,  is  very  unfortunate,  not 
only  for  the  individual  shareholders  but  also  for  the  com- 
munity. Such  an  occurrence  goes  far  towards  creating 
a  distrust  of  this  method  of  co-operation.  Such  a  distrust 
once  aroused  is  likely  to  continue  for  one  or  two  genera- 

[169] 


CHAPTER  XVII. 

tions.  Persons  who  lose  money  in  a  building  association 
will  be  very  slow  to  risk  their  earnings  in  another  such 
institution,  and  their  families,  neighbors,  and  friends  will 
be  influenced  strongly  by  their  opinion  and  attitude.  Such 
a  failure  not  only  causes  embarrassment  to  associations 
already  in  operation,  but  prevents  the  establishment  of 
other  associations  in  that  immediate  vicinity.  The  influ- 
ence goes  farther,  for,  those  who  have  suffered  by  it, 
removing  into  new  neighborhoods  and  communities,  even 
at  a  great  distance,  carry  with  them  the  story  of  their 
unfortunate  experience,  and  this  may  be  sufficient  to 
prevent  the  establishment  of  such  societies  elsewhere. 
Upon  this  ground  alone  it  behooves  all  persons  who  are 
interested  in  the  welfare  of  this  form  of  co-operation,  and 
who  are  convinced  of  the  good  that  it  is  accomplishing, 
and  of  the  great  future  that  awaits  it,  to  insist  upon  the 
regular  and  responsible  auditing  of  the  accounts  in  the 
associations  with  which  they  are  connected. 

Many  other  considerations  of  like  general  character, 
showing  the  necessity  of  the  regular  and  thorough  audit- 
ing of  the  accounts  of  building  associations,  will  suggest 
themselves  to  the  intelligent  reader,  and  need  not  be 
mentioned  here. 

PURPOSES  OF  AUDITING. 

The  wholesome  effect  of  official  supervision  and  com- 
pulsory auditing  on  part  of  the  state  is  now  generally 
recognized,  and  the  indications  are  that  its  sphere  will  be 
extended  and  perfected  in  the  future.  That  this  system 
of  co-operative  saving  shall  have  continued  popularity  it 

[170] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

must  hold  the  confidence  of  the  people.  This  can  be 
accomplished  only  by  throwing  about  it  such  wise  safe- 
guards as  experience  has  shown  to  be  necessary  in  order  to 
make  and  keep  it  worthy  of  such  confidence. 

Auditing  is  supervision  practically  applied.  It  means 
not  only  testing  the  accuracy  and  the  trustworthiness  of 
the  accounts,  and  the  honesty  and  efficiency  of  officers, 
but  it  includes  also  the  testing  and  the  perfecting  of 
methods,  and  the  securing  of  practical  economy.  It 
involves  the  proving  of  the  conduct  of  an  association  by 
the  fundamental  principles  upon  which  this  form  of  co- 
operation is  based  on  the  one  hand,  and  also  by  external 
checks  and  testimony  on  the  other.  A  proper  audit 
reviews  both  the  plan  and  the  method  of  the  society,  and 
also  its  practical  operations. 

An  association,  properly  organized  and  properly 
operated,  is  like  a  complicated  piece  of  machinery,  in 
which  each  part  is  nicely  adjusted  to  fit  into  its  cor- 
responding parts,  so  that  all  work  together  in  a  perfect 
co-ordination,  with  the  least  friction,  and  with  economy 
of  power,  and  reach  the  highest  productive  or  executive 
possibility.  Only  a  regular  systematic  audit  will  keep  the 
machinery  of  an  association  in  good  form  and  perfect  run- 
ning order.  If  an  audit  has  no  other  effect  than  to  cause 
an  association  to  keep  up  proper  appearances,  it  fulfills  an 
important  function.  The  audit  takes  the  affairs  of  the 
society  as  it  finds  them  and  compares  them  with  what 
they  would  be  if  ideally  perfect,  and  thus  furnishes  a  test 
of  the  actual  status  of  the  organization  and  a  correspond- 
ing gauge  of  its  usefulness  and  its  title  to  confidence. 

[171] 


CHAPTER  XVII. 

Formulated  somewhat  specifically,  the  principal  reasons 
why  the  accounts  of  an  association  should  be  audited 
regularly  and  carefully  are  as  follows : 

1.  For  the  protection  of  the  business  of  the  association 
as  a  corporate  body. 

2.  For  the  protection  of  the  individual  members,  both 
creditors  and  borrowers. 

3.  To  determine  that  the  business  is  conducted  accord- 
ing to  statutory  requirements,  and  also  in  harmony  with 
the  provisions  of  the  constitution  of  the  association. 

4.  For  the  purpose  of  determining  whether  the  busi- 
ness of  the  association  is  conducted  economically  and 
according  to  the  most  approved  and  best  labor-saving 
systems. 

5.  For  the  purpose  of  having  available  at  all  times 
and  for  any  purpose  a  verified  and  reliable  statement  of 
the  association's  affairs. 

6.  To  elevate  and  maintain  the  standing  of  the  asso- 
ciation as  one  of  the  competitive  financial  institutions  of 
the  community,  and  to  supply  the  necessary  evidence  of 
its  safety  and  prosperity  to  all  persons  who  would  make 
desirable  members. 

PROTECTION  OF  CORPORATE  INTERESTS. 

Practically  an  association  is  a  business  partnership. 
Each  member  commits  his  capital  to  it  as  he  pays  in  his 
regular  installments.  This  capital,  in  its  aggregate 
interest,  is  risked  in  the  transactions  of  the  association.  It 
must  be  guarded,  not  only  from  thieves  who  would  break 
through    and    steal,   but    from    speculative    risks    and 

[172] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

embezzlement.  It  must  be  directed  into  the  channels  for 
which  it  is  intended.  It  must  be  so  handled  as  to  make 
it  productive  in  the  highest  possible  legitimate  degree.  It 
must  have  all  the  care,  and  the  same  kind  of  care  neces- 
sary in  the  management  of  any  purely  individual  or 
private  interest.  The  association's  prosperity  is  depend- 
ent upon  the  confidence  and  the  co-operation  of  its  own 
members.  It  deals  only  with  members.  The  officers  must 
not  only  be  capable  and  trustworthy,  but  must  so  keep  the 
records  and  accounts  that  the  actual  financial  condition 
of  the  association  and  the  results  of  its  business  opera- 
tions may  be  at  any  time  readily  and  correctly  ascertained. 
When  the  accounts  are  kept  correctly  and  stand  the  test 
of  a  careful  audit,  the  members  are  enabled  to  judge  as  to 
the  safety  and  the  profit  of  their  investments.  Any 
irregularity  of  management  will  be  discovered  before  it 
reaches  such  proportions  as  to  jeopardize  the  stability  or 
the  solvency  of  the  association. 

PROTECTION  OF  MEMBERS. 

Members  of  an  association  entrust  their  surplus  earn- 
ings to  it  in  order  to  save  them.  If  it  were  not  for  this 
purpose  of  saving  they  would  have  no  use  for  the  associa- 
tion. When  a  properly  verified  balance  sheet  is  pre- 
sented, showing  that  the  money  actually  saved  is  safe, 
and  is  moreover  so  invested  that  it  is  earning  something, 
and  that  there  are  no  actual  or  prospective  losses,  defi- 
ciencies, bad  debts,  defalcations,  etc.,  then  the  members 
know  that  they  have  taken  all  necessary  precautions  to 
protect  and  to  conserve  their  interests.     They  know  also 

[173] 


CHAPTER  XVII. 

that  by  the  methods  the  officers  have  adopted  and  by  the 
system  of  auditing  which  has  been  inaugurated,  they  are 
able  to  discover  any  leakage  before  it  reaches  such  propor- 
tions as  to  endanger  their  money. 

As  remarked  in  another  place,  a  practical  system  of 
auditing  is  indispensable  when  the  affairs  of  an  associa- 
tion are  prosperous.  It  is  all  the  more  necessary  when  this 
is  not  the  case.  Any  lack  of  prosperity  is  thus  discovered 
promptly,  and  immediate  steps  may  be  taken  to  improve 
the  situation,  if  this  be  possible.  If  this  cannot  be  done, 
members  will  know  what  to  expect,  and  will  not  be  dis- 
appointed at  low  dividends  or  no  dividends.  If  the  situa- 
tion is  so  bad  as  to  make  it  necessary,  arrangements  may 
be  made  to  wind  up  the  affairs  of  the  association  before 
they  reach  such  a  condition  as  to  involve  seriously  the 
interests  of  the  members. 

Occasionally  an  association  is  allowed  to  drag  along 
feebly  after  it  has  become  apparent  that  it  is  not  prosper- 
ing, until  it  reaches  a  condition  when  it  is  impossible  to 
wind  it  up  without  serious  loss.  Such  a  case  may  arise 
from  outside  circumstances,  local  or  otherwise,  as  well  as 
from  mismanagement  or  inattention  on  the  part  of  the 
officers.  Many  circumstances,  as  the  removal  of  factories, 
the  depreciation  of  real  estate,  and  other  such  things,  may 
change  the  conditions  under  which  an  association  was 
established.  It  is  always  best  to  know  the  worst  at  once 
and  to  act  accordingly.  When  losses  accumulate  until  a 
crash  comes,  it  is  nearly  always  found  that  the  assets  are 
less  in  value  than  they  are  supposed  to  be.  In  addition, 
the  cost  of  winding  up  is  so  greatly  increased  that  this  of 

[174] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

itself  very  materially  reduces  the  assets.  This  is  a  con- 
dition that  should  never  be  permitted  to  arise,  and  one  that 
is  practically  impossible  under  any  proper  system  of 
auditing. 

STATUTORY  AND   CONSTITUTIONAL  REQUIREMENTS. 

The  business  of  building  associations  has  grown  to  such 
proportions  that  it  has  become  one  of  the  important  fac- 
tors in  the  financial  transactions  of  the  country.  In  few 
other  connections  are  the  personal  property  interests  of  a 
larger  number  of  citizens  involved.  There  is  this  other 
consideration  also,  that  the  number  of  citizens  who  entrust 
their  savings  to  the  care  of  associations  is  likely  to  con- 
tinue to  increase  at  a  very  rapid  rate.  Very  properly, 
therefore,  the  legislatures  in  the  different  states  give  the 
subject  attention  from  time  to  time,  and  provide  by  statute 
the  limitations  and  the  methods  to  be  observed  by  the 
associations. 

These  corporations,  in  order  for  their  own  guidance, 
establish,  under  the  statutes  of  the  state,  certain  rules 
and  regulations,  which  they  embody  in  their  constitutions 
and  by-laws.  These  rules  determine  the  methods  and  the 
restrictions  of  their  operations.  Upon  the  faithful  observ- 
ance of  these  depend  the  safety  and  the  prosperity  of  the 
associations  and  the  protection  of  the  deposits  made  by 
shareholders. 

In  a  sense,  therefore,  it  is  the  business  of  an  auditor 
to  inspect  as  well  as  to  audit.  Not  only  should  he  compare 
and  check  items,  verify  entries  and  footings,  etc.,  and  test 
all  the  details  of  the  accounting  and  the  book-keeping,  but 

[175] 


CHAPTER  XVII. 

he  should  inspect  the  methods  upon  which  the  system  of 
accounting  is  based,  and  the  ends  it  aims  at,  and  should 
satisfy  himself  that  both  the  accounting  and  the  opera- 
tions of  the  associations  are  in  accordance  with  the  consti- 
tution and  the  by-laws,  and  farther  than  this,  that  the  rules 
themselves  of  the  association  are  in  harmony  with  the 
statutes  of  the  state.  It  is  only  by  this  system  of  far- 
reaching  and  thorough  auditing  that  an  auditor  can  render 
a  faithful  report  to  those  who  have  trusted  their  interests 
for  the  time  being  to  his  guardianship. 

ECONOMICAL,  LABOR-SAVING,  AND  SIMPLE  METHODS. 

People  desire  economy  and  simplicity  in  the  manage- 
ment of  their  business.  They  do  not  want  an  unneces- 
sary expenditure  of  money,  nor  a  cumbrous  system  which 
they  cannot  understand.  They  like  to  see  economical  and 
labor-saving  methods  adopted  in  the  management  of  the 
business  of  their  associations,  and  all  superfluous  work 
and  intricate  books  dispensed  with.  They  like  to  have 
accounts  in  such  form  that  they  themselves  can  readily 
understand  them  and  thus  perceive  how  they  are  kept. 
Experience  has  shown  that  the  weakness  of  many  associa- 
tions which  have  failed  has  been  just  here.  There  was  a 
waste  of  money  in  the  manner  in  which  the  business  was 
conducted.  Much  unnecessary  work  was  required,  and 
the  system  followed  was  so  intricate  and  cumbersome  that 
it  was  not  readily  understood,  and  it  did  not  give  a  plain 
showing  of  the  affairs  of  the  association.  Consequently, 
an  association  would  become  involved  before  its  real  con- 
dition was  discovered. 

[176] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

Proper  auditing,  by  those  expert  in  such  matters,  would 
quickly  detect  any  such  condition  as  this  and  put  an 
end  to  it. 


THE  BALANCE  SHEET. 

The  best  method  of  securing  this  condition  is  to  have 
thoroughly  efficient  auditors,  appointed  by  the  state,  or 
appointed  by  and  responsible  to  the  stockholders  and 
directors  of  the  association,  to  examine  the  records,  and 
to  report  to  them  the  manner  in  which  accounts  have  been 
kept,  to  verify  the  balance  sheet,  and  to  be  able  to  state 
that  in  this  the  secretary  and  the  directors  have  shown 
correctly  the  business  for  the  period  covered,  and  that  it  is 
a  true  exhibit  of  the  condition  of  the  association  upon  the 
date  of  its  issue.  Such  a  statement  thus  verified  enables 
the  members  to  act  with  intelligence  and  confidence,  and 
also  gives  to  outsiders  who  may  wish  to  become  members, 
or  who  may  have  some  other  interest,  full  and  trustworthy 
information.  If  an  association  is  prosperous  a  correct 
balance  sheet  is  its  best  advertisement.  If  it  is  not  pros- 
perous the  balance  sheet  should  all  the  more  demonstrate 
the  fact  in  order  that  the  members  may  be  fully  warned. 

In  this  connection  it  may  be  remarked  in  passing  that 
such  methods  of  book-keeping  have  now  been  devised  for 
associations  that  the  secretary's  accounts  may  exhibit  a 
continuous  balance  sheet,  showing  at  any  moment  the 
exact  condition  of  the  association's  business. 


[177] 


CHAPTER  XVII. 

THE  AUDITOR  THE  REPRESENTATIVE  OF  THE  MEMBERS. 

The  first  point  to  make  distinct  is  that  an  auditor  does 
his  work  in  the  interest  of  the  members  as  contra-distin- 
guished from  the  officers  of  an  association,  and  is  their 
representative.  He  knows  nothing  of  and  cares  nothing, 
for  the  time  being,  for  the  officers  whose  accounts  he  is 
examining.  He  is  appointed  for  the  purpose  of  ascertain- 
ing on  behalf  of  the  stockholders  that  their  money  has 
been  properly  accounted  for,  that  such  of  the  funds  as 
have  been  expended  have  been  applied  in  the  manner 
intended  and  as  indicated  in  the  accounts,  and  that  the 
unexpended  portion  is  invested  or  held  as  intended,  and 
that  this  is  shown  in  the  report  and  the  balance  sheet.  In 
a  general  way  he  is  to  give  to  the  co-partners  or  share- 
holders his  assurance  that  the  transactions  of  the  officers 
and  the  directors  in  the  management  of  the  business  of  the 
association  has  been  wise  and  discreet,  and  according  to 
the  rules  and  the  purposes  of  the  association,  and  that  the 
report  and  the  statement  which  they  present  correctly  and 
accurately  represent  the  actual  transactions  and  condition 
of  the  association,  and  that  it  may  be  relied  upon  as  show- 
ing the  real  result  of  their  management,  that  the  balance 
sheet  presents  the  actual  receipts  and  expenditures,  costs 
and  gains,  and  liabilities  and  assets,  for  the  term  it  covers. 

For  the  time  being  the  auditor  is  the  critic,  the  judge, 
of  the  officers, — their  friend  and  ally  if  their  accounts  are 
correct  and  their  conduct  right,  their  uncompromising 
antagonist  if  they  are  guilty  of  any  shortcoming  or 
wrongdoing. 


[178] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

THE  SELECTION  OF  AN  AUDITING  COMMITTEE. 

Determining  who  shall  be  the  auditor  or  auditing  com- 
mittee is  a  very  important  matter.  In  most  associations, 
that  is  to  say  in  associations  that  have  not  long  been 
organized,  the  auditors  are  usually  three  or  five  members 
selected  by  the  membership  at  large,  or  by  the  directors, 
for  this  purpose.  In  the  older  associations,  and  in  not  a 
few  of  the  younger  ones,  a  single  auditor  is  chosen  who,  as 
a  rule,  is  a  professional  accountant,  and  may  or  may  not 
be  a  member.  Other  things  being  equal,  it  is  better  that 
he  should  not  be  a  member  of  the  association,  since  thus  he 
may  be  supposed  to  be  wholly  disinterested.  It  will  be 
for  each  association  to  determine  for  itself,  whether  the 
auditing  shall  be  by  a  committee  of  members  or  by  the 
employment  of  a  special  auditor  or  professional 
accountant. 

QUALIFICATIONS  FOR  AUDITING. 

Whether  the  audit  be  by  a  single  individual,  or  by 
a  committee,  the  qualifications  must  be  the  same.  If  by 
an  individual,  he  must  possess  all  the  qualifications  him- 
self; if  by  a  committee,  one  member  may  be  versed  in  one 
part  of  their  work,  and  another  skilled  in  some  other 
department.  For  convenience  in  presenting  the  subject, 
and  in  order  to  make  it  a  little  more  pointed  and  specific, 
we  will  treat  the  auditor  in  the  singular  number,  and  will 
speak  of  the  qualifications  necessary  to  any  individual  who 
should  be  regarded  as  competent  for  such  a  task. 

The  auditor's  duties  begin  immediately  with  the  books 
and  the  accounts  of  an  association.    These  must  be  placed 

[179] 


CHAPTER  XVIL 

in  his  hands,  posted  and  balanced  up  to  date,  including 
the  last  meeting  for  the  term  over  which  his  duty  is  to 
extend.  The  mistake  should  not  be  made  that  he  is  to  take 
the  books  and  accounts  of  an  association  and  put  them  into 
proper  shape,  if  he  does  not  find  them  so.  He  has  nothing 
to  do  with  this,  unless  he  is  employed  to  correct  as  well  as 
to  audit  the  books.  He  is  to  take  them  just  as  he  finds  them 
and  to  report  upon  them  as  they  are.  While  an  auditor 
must  be  a  book-keeper,  auditing  is  not  book-keeping.  How 
frequently  it  happens  that  an  auditing  committee  sets  to 
work  to  straighten  up  the  books  and  the  accounts  of  an 
association  preliminary  to  their  auditing  and  checking. 
Keeping  the  accounts  belongs  wholly  to  the  officers  of  the 
association,  and  it  is  the  business  of  the  auditor  to  report 
upon  things  exactly  as  he  finds  them  without  mending  or 
altering  them  in  any  way.  He  is  the  representative  of  the 
shareholders  and  membership  at  large,  and  not  an  assistant 
of  the  secretary  and  other  officers.  It  is  his  business  to 
criticise  and  find  fault — if  criticism  is  warranted — w'ith 
the  work  of  the  secretary  and  the  officers  as  shown  in 
their  books  and  reports,  and  not  to  correct  and  cover  up 
their  faults  and  shortcomings. 

Not  only  must  an  auditor  have  a  thorough  knowledge 
of  accounts  generally,  but  he  must  be  an  expert  in  asso- 
ciation accounts.  The  first  principles  of  accounting  are 
the  same  always  and  everywhere;  but  in  each  particular 
line  of  business  the  application  of  the  first  principles  must 
vary.  Consequently,  one  may  be  an  expert  bank  account- 
ant but  not  posted  in  insurance  accounting,  or  in  manufac- 
turing or  in  merchandising.  Building  association  accounts 

[180] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

have  their  own  distinct  peculiarities,  and  present  certain 
features  of  accounting  not  found  in  other  lines  of  busi- 
ness. The  best  auditor  of  building  association  accounts 
therefore  must  be  a  specialist  in  this  particular  line. 

Again,  there  is  progress  in  the  science  and  art  of 
accounting  as  in  all  other  sciences  and  arts.  Methods 
formerly  in  general  use  are  now  discarded  for  those  which 
are  better.  In  every  line  of  business  labor-saving  systems 
have  been  introduced  which  not  only  make  economy  in 
time  and  expense  possible,  but  also  greatly  simplify  the 
plans  and  make  the  results  more  readily  attainable  and 
comprehensible.  There  are  many  devices  now  in  com- 
mon use  which  facilitate  and  expedite  the  work  of  an 
accountant.  An  auditor  should  not  be  an  old  fogy.  He 
should  be  up  with  the  times  and  have  a  full  knowledge 
of  modern  methods  and  improvements  and  all  labor  and 
time-saving  devices.  He  should  have  a  quick  grasp  of 
things,  so  that  he  can  see  at  once  the  correlation  of  all  the 
afifairs  of  the  association,  and  also  the  relations  which  each 
separate  account  or  item  bears  to  the  whole. 

Not  only  must  he  be  an  expert  accountant,  but  he  must 
understand  the  philosophy  and  the  principles  of  the  line 
of  business  with  which  he  is  dealing.  A  building  associa- 
tion is  the  application  of  the  principles  of  co-operation  to 
business  matters.  The  business  of  an  association  differs 
from  that  of  an  individual,  or  of  an  ordinary  business  firm, 
in  the  fact  that  the  private  interests  of  so  many  more 
individuals  are  involved.  This  introduces  the  elements  or 
principles  of  co-operation.  In  order  to  see  that  these  are 
correctly  applied  and  carried  out  it  is  necessary  that  the 

[181] 


CHAPTER  XVII. 

auditor  shall  himself  be  well  informed  in  regard  to  the 
principles  which  underlie  co-operation  in  general,  and  co- 
operation in  this  special  direction  in  particular. 

It  hardly  seems  necessary  to  say  that  an  auditor  must 
be  honest  and  incorruptible.  His  intentions  and  purposes 
must  be  absolutely  correct  on  the  one  hand,  and  on  the 
other  he  must  not  be  susceptible  to  any  kind  of  influence 
that  might  lead  him  away  from  such  purposes.  Any  such 
influence  as  deliberate  attempts  at  bribery  are  hardly  to  be 
expected  in  such  an  institution  as  a  building  association, 
but  there  might  be  the  influence  of  friendship,  or  sym- 
pathy, or  something  of  that  kind,  which  would  tend  to 
swerve  an  auditor  from  a  straight  line.  These  must  be 
guarded  against,  not  only  on  the  part  of  the  members  in 
the  selection  of  the  auditor,  but  on  the  part  of  the  auditor 
himself   in  the  prosecution  of  his  work. 

An  auditor  must  be  courageous  and  firm.  He  may  find 
himself  antagonized  and  opposed.  He  may  find  opposi- 
tion where  he  expected  co-operation.  He  may  find  weak- 
ness where  he  expected  strength.  He  may  be  placed  under 
a  variety  of  circumstances  which  make  it  difficult  for  him 
faithfully  to  prosecute  his  work.  His  courage  and  firm- 
ness must  never  fail. 

He  must  be  a  discreet  man,  one  capable  of  keeping  his 
own  counsel,  going  his  own  way,  minding  his  own  busi- 
ness, and  reaching  his  own  conclusions. 

He  must  be  a  man  of  tact  and  courtesy,  having  the 
faculty  of  finding  out  what  he  wants  to  know,  of  winning 
the  esteem  and  confidence  of  those  with  whom  he  is 
brought  into  contact,  and  of  commanding  the  respect  even 

[182] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

of  those  whose  shortcomings  or  faults  he  may  be  called 
upon  to  expose. 

Withal  he  must  be  a  man  of  moderation  and  forbear- 
ance, not  hasty  to  reach  conclusions,  not  disposed  to  take 
any  improper  advantage  of  his  position  or  knowledge, 
and  not  inclined  to  be  dictatorial  or  overbearing  in  his 
manners  in  any  respect. 

DISQUALIFICATION  OF  AUDITORS. 

That  a  proper  system  of  auditing  goes  far  to  establish 
confidence  in  an  association  has  been  proven  beyond 
doubt.  The  shareholders  should  bear  in  mind  that  it  lies 
in  their  power  to  increase  the  advantages  of  auditing  to 
the  maximum  by  a  judicious  selection  of  auditors  and  the 
adoption  of  the  best  methods  as  to  the  time,  manner, 
frequency,  etc.,  of  making  the  audits.  A  man  may  be  a 
good  penman  or  copyist,  or  may  be  reliable  in  the  addition 
of  columns  of  figures,  or  in  multiplication,  etc.,  he  may  be 
successful  as  a  mechanical  or  routine  book-keeper,  and 
still  be  wholly  incompetent  as  an  auditor.  To  be  capable 
of  making  an  audit,  he  must  have  a  thorough  comprehen- 
sion of  what  the  figures  and  the  items  he  has  to  inspect 
mean,  and  must  understand  their  philosophical,  as  well  as 
their  mathematical  relations.  A  scheming  official  might 
easily  keep  a  book-keeper's  clerk  or  assistant  in  a  good 
humor  with  himself  by  giving  him  plenty  of  mechanical 
work  to  do,  checking  this  and  that,  adding  and  subtract- 
ing here,  and  multiplying  there,  all  of  which  would 
lead  to  nothing  at  all,  but  would  leave  the  auditor  (?) 
with  the  impression  that  he  was  making  a  very  thorough 

[183] 


CHAPTER  XVII. 

audit.  By  thus  flattering  his  vanity,  and  enabling  him  to 
make  a  great  show  of  his  work,  he  could  be  effectually 
thrown  off  of  any  dangerous  scent,  and,  while  indus- 
triously calling  off  and  checking  items  and  details,  the 
foot-prints  of  fraud  could  be  entirely  covered  up.  Indeed, 
he  might  in  this  way  handle  the  very  item  which  covers 
or  omits  fraudulent  transactions.  He  would  be  so  taken 
up  with  the  mechanical  part  of  his  work  that  he  would 
never  discover  anything. 

ASSISTANCE  FROM   OFFICIALS. 

An  auditor  who  cannot  audit  without  the  assistance  of 
the  secretary  is  not  the  man  for  the  place.  It  is  not  an 
uncommon  occurrence  to  see  a  secretary  busily  engaged  in 
assisting  an  auditor  by  reading  out  from  pencil  memoran- 
da in  his  ledger  the  amounts  which  are  to  be  checked  in 
the  pass-books,  and  then  these  pencil  figures  on  the  ledger 
are  erased  before  the  ledger  is  presented  to  the  auditor  for 
other  purposes.  An  auditor  who  must  be  assisted  is  one 
to  be  avoided. 

After  the  books  have  been  placed  in  his  hands  and 
explanations  have  been  made  of  the  system  which  is  fol- 
lowed, and  matters  have  thus  been  formally  turned  over 
to  him,  an  auditor  should  take  full  charge  and  set  about 
his  work  without  the  presence  of  any  of  the  officials  unless 
he  shall  summon  them  to  answer  questions,  or  to  make 
necessary  explanations.  If  he  finds  new  features  in  bookr 
keeping  in  vogue  with  which  he  is  not  familiar  he  should 
frankly  say  so,  and  ask  questions  freely  until  he  under- 
stands the  sytem.    He  cannot  make  his  audit  without  hav- 

[184] 


AUDITING:   ITS  NECESSITY  AND  OBJECT. 

ing  this  knowledge,  and  it  is  due  to  the  officials,  to  the 
shareholders  whose  interest  he  represents,  and  to  himself, 
that  he  secure  the  information.  This  having  been  secured, 
he  is  then  able  to  understand  everything  clearly,  and  to 
report  upon  it  correctly,  and  should  proceed  to  do  his  own 
work  in  his  own  way. 

CHANGE  OF  AUDITORS. 

It  may  be  desirable,  as  a  precaution,  or  for  other 
reasons,  to  make  a  change  of  auditors  from  time  to  time ; 
but  no  change  should  be  made  for  the  mere  sake  of  a 
change.  An  auditor  who  has  once  gone  over  the  accounts 
of  an  association  has  acquired  a  familiarity  with  them, 
that  is  to  say  a  special  knowledge  of  them,  which  would  be 
valuable  to  him  in  making  a  second  audit.  If  he  is 
efficient  and  satisfactory,  and  there  is  no  special  reason 
for  making  a  change,  it  will  be  desirable  to  continue  him 
in  the  position.  If  the  books  are  audited  by  a  committee 
it  will  be  easy  to  keep  an  old  hand  in  the  lead  with  new 
assistants  from  time  to  time.  There  is  often  a  risk  in 
placing  the  matter  of  auditing  in  new  hands  from  the 
fact  that  it  may  not  be  possible  to  know  with  certainty  that 
the  new  hands  are  competent  ones.  On  this  account  it  is 
better  never,  if  it  can  be  avoided,  to  place  an  audit  in 
wholly  untried  hands.  There  may  be  natural  incapacity, 
or  a  lack  of  training,  which  will  make  the  work  unreliable 
and  unsatisfactory. 


[185] 


CHAPTER  XVII. 

COMPENSATION  OF  AUDITORS. 

There  is  no  more  important  work  to  be  done  for  an 
association  than  the  auditor's.  In  order  that  it  may  be 
done  properly  the  very  best  talent  available  should  be 
obtained  for  it.  It  is  very  poor  policy  for  share-holders 
to  seek  the  cheapest  auditors.  One  employed  for  this 
purpose  should  be  made  to  feel  that  he  is  well  paid  for  his 
services.  Being  free  and  satisfied  on  this  score,  he  is 
thereby  inspired  to  more  faithful  service  than  he  might 
otherwise  render.  It  is  especially  unfair  for  shareholders 
to  expect  any  of  their  fellow-members  to  give  their  expert 
knowledge  and  their  time  to  this  painstaking  and  laborious 
work  without  fair  remuneration.  In  estimating  the  value 
of  an  auditor's  service  it  is  not  so  much  the  amount  of 
time  that  he  gives  to  it  that  should  be  considered, — 
although  this  should  not  be  ignored, — as  the  fact  that  his 
work  is  in  the  nature  of  professional  services,  and  should 
be  paid  for  according  to  its  professional  value. 


[186] 


CHAPTER  XVIII. 


Auditing:  Its  Methods, 


UNIFORMITY  IMPOSSIBLE. 

In  THE  preceding  chapter  the  subject  of  auditing  has 
been  discussed  in  reference  to  its  general  principles  and 
features.  But,  in  order  that  the  suggestions  of  this  work 
may  be  made  of  as  much  practical  value  as  possible,  it  is 
necessary  to  indicate,  as  far  as  may  be,  how  these 
principles  are  to  be  applied  in  practice.  Every  one  will 
understand  that  it  is  impossible  to  lay  down  a  set  of 
specific  rules  which  will  apply  in  all  cases.  It  is  only  the 
application  of  the  principles  of  auditing  in  a  general  way 
that  can  be  pointed  out  here.  These  must  be  adapted  to 
circumstances  as  they  may  be  found  to  exist  wherever  they, 
come  to  be  specifically  applied.  Even  in  any  one  particular 
association,  circumstances  differ  from  time  to  time  as  new 
contingencies  arise.  Consequently  there  must  be  more  or 
less  variation  in  the  application  of  any  set  of  rules.  While 
the  rules  and  suggestions  which  follow  are  given  in  out- 
line, the  endeavor  has  been  made  to  make  them  sufficiently 
comprehensive  to  cover  almost  any  set  of  circumstances 
that  may  arise  in  the  practical  operations  of  an  association. 

[187] 


CHAPTER  XVIII. 

CARE  OF  BOOKS. 

An  auditor  should  notice  whether  or  not  the  books  of 
an  association  are  well  cared  for.  He  should  see  where 
they  are  kept  and  how  they  are  handled,  should  notice 
whether  or  not  they  are  in  good  condition,  and  are  clean. 
He,  himself,  in  turn  should  handle  them  carefully,  keep- 
ing them  neat  and  clean,  and  placing  upon  them  only  the 
necessary  check  marks,  and  should  make  these  as  small 
and  as  neat  as  possible.  Auditors  will  find  that  books 
which  are  neat  and  clean  in  appearance,  in  which  the 
entries  are  tastefully  made,  balances  properly  ruled  off, 
etc.,  will  as  a  rule  contain  accounts  that  are  correctly  kept. 
Where  the  condition  of  the  books  is  such  as  to  indicate 
carelessness  in  their  handling,  an  auditor  may  well  expect 
to  find  carelessness  in  the  accounts  themselves,  for,  care- 
less in  one  thing  careless  in  all  things,  may  be  expected  to 
be  the  rule.  If  the  secretary  or  other  ofificer  is  neglectful 
of  his  duties,  or  has  erasures  and  finger-marks  all  through 
his  books,  he  is  likely  to  have  errors,  both  of  omission  and 
commission,  in  his  entries. 

SPECIAL  HINTS. 

A  list  of  the  books  in  use  having  been  furnished  to  the 
auditor  he  should  make  it  his  first  business  to  see  that  it 
is  complete,  and  that  all  the  books  named  in  it  are  in  his 
hands.  He  should  next  turn  his  attention  to  the  general 
features  and  conditions  of  the  books  themselves.  He 
should  see  whether  they  constitute  a  perfect  system  with- 
out any  break,  that  is,  whether  the  books  are  like  the  dif- 
ferent parts  of  a  machine,  each  wheel  fitting  properly  into 

[188] 


AUDITING:   ITS  METHODS. 

the  others,  and  no  wheel  absent.  He  should  examine  each 
book  and  note  all  the  particulars  concerning  it.  For 
instance,  he  should  see  if  the  books  are  machine-paged, 
since  this  is  one  of  the  most  efficient  safeguards  against 
tampering  such  as  cutting  out  or  pasting  together  of 
leaves,  and  so  on,  and  is  a  most  important  feature  in  the 
tracing  of  entries.  All  books  which  in  any  way  have  con- 
nection with  financial  transactions  in  the  receipt  or 
expenditure  of  money  should  be  numbered  in  consecutive 
pages  by  a  machine.  They  should  begin  with  page  1,  and 
should  continue  in  regular  numerical  order.  It  sometimes 
happens  that  books  become  very  large,  and  the  page 
numbers  become  too  large  for  convenience  in  practical 
work.  Various  expedient  may  be  resorted  to  in  such  cases. 
The  first  series  of  pages  may  run  up  to  1,000.  Then  a 
new  series  may  begin  which  will  be  called  A,  as  A  1,  A  2, 
A  3,  and  so  on,  while  a  third  series  may  be  B  1,  B  2,  B  3, 
and  so  on. 

Attention  should  be  given  next  to  the  clerical  work  in 
the  books  to  see  whether  all  entries  have  been  made, 
whether  they  are  clear  and  legible,  and  whether  the  exten- 
sions and  footings  have  been  carried  out.  If  omissions 
are  discovered  the  attention  of  the  officers  should  be  called 
to  them,  and  the  officers  themselves  should  fill  them  up. 
If  entries  are  found  which  are  not  in  due  form,  but  are  in 
the  nature  of  memoranda,  this  should  be  noted,  and,  if 
necessary  the  officials  should  be  called  upon  to  complete 
their  work.  If  any  entries  are  made  in  pencil,  or  footings 
appear  in  pencil,  the  pencil  work  should  not  be  accepted, 
because,  after  the  audit  is  completed,  such  entries  could  be 

[189] 


CHAPTER  XVIII. 

easily  changed.  The  original  rulings  of  the  books,  and 
also  all  rulings  made  in  the  course  of  the  accounts  should 
be  noted.  If  these  rulings  do  not  fulfill  their  purpose 
clearly  the  fact  should  be  noted  and  the  matter  properly 
cleared  up. 

These  preliminary  matters  having  been  noted,  the 
auditor  should  next  turn  his  attention  to  the  particular 
accounts.  He  should  first  notice  the  method,  or  modus 
operandi,  upon  which  the  accounts  are  kept.  He  then 
should  test  the  different  accounts  by  taking  certain  items 
and  tracing  them  from  book  to  book  so  as  to  obtain  a  clear 
knowledge  of  the  process  by  which  the  accounts  are 
made  up. 

As  the  auditor  proceeds  with  his  work  various  inci- 
dental matters  will  continually  arise  to  claim  his  attention. 
He  must  be  prepared  by  intelligence  and  experience  to 
look  out  for  these  himself.  They  can  not  be  specifically 
scheduled.  A  few  such  matters  may  be  mentioned  partic- 
ularly by  way  of  suggestion. 

He  should  see  that  no  dividends  have  been  declared  out 
of  the  capital,  or  out  of  earnings  which  have  not  yet  been 
realized. 

He  should  see  whether  or  not  any  capital  has  been 
invested  in  securities  that  are  illegal  or  improper,  and 
false  assets  shown  in  this  way. 

He  should  inquire  as  to  whether  the  constitution  and 
the  rules  have  been  followed  in  all  matters  relating  to  the 
accounts,  and,  if  the  directors  are  empowered  with 
authority  to  use  their  discretion  in  any  official  transactions, 


[190] 


AUDITING:   ITS  METHODS. 

whether  or  not  their  resolutions  and  instructions  have  been 
carried  out  to  the  letter. 

He  should  see  that  rebates  in  interest  are  allowed  cor- 
rectly, and  all  incidental  items  are  properly  entered  and 
considered. 

He  should  examine  carefully  the  profit  and  loss  account, 
inspecting  and  verifying  each  item.  He  should  see,  for 
instance,  that  any  provision  in  the  rules  permitting  allow- 
ance for  depreciation  in  the  value  of  fixtures,  stationery, 
etc.,  has  been  followed,  and  that  such  entries  are  properly 
made. 

Every  auditor  should  have  a  system  of  check  marks  of 
his  own.  These  should  be  made  with  ink  or  an  ink  pencil. 
They  may  be  in  different  colors  and  in  different  forms  as 
he  may  find  necessary  for  the  perfection  of  his  work.  By 
putting  his  proper  check  on  each  item  as  he  passes  upon  it 
he  will  not  fall  into  confusion,  and  each  item  will  tell  its 
own  story  as  soon  as  he  looks  at  it.  He  will  also  know  in 
this  way  when  his  work  is  completed,  and  his  check  marks 
will  remain  for  the  information  and  guidance  of  himself 
or  others  in  making  future  audits. 

FALSE  ACCOUNTS. 

It  is  the  auditor's  business  to  detect  mistakes  and  mis- 
representations. Mistakes  occur  through  inefficiency  or 
carelessness.  Misrepresentations  arise  from  an  intention 
to  deceive.  Mistakes  may  be  rectified ;  misrepresentations 
must  be  exposed.  In  case  therefore,  the  secretary  or  the 
board  of  directors  have  intentionally  prepared  and  sub- 
mitted a  false  statement,  the  auditor  may  have  a  more  or 

[191] 


CHAPTER  XVIII. 

less  unpleasant  and  sometimes  difficult  task  before  him. 
If  he  is  efficient,  he  will  soon  be  able  to  detect  the  fact  that 
the  account  is  incorrect.  If  it  has  been  made  so  inten- 
tionally, he  will  soon  discover  this  also.  Being  properly 
put  upon  his  guard  by  his  discovery,  he  will  need  to  sum- 
mon all  his  tact  and  firmness,  and  settle  down  to  a  faithful 
and  thorough  investigation.  He  must  now  prepare  him- 
self not  only  to  point  out  the  errors  in  the  account  but  also 
to  expose  the  purpose  and  method  of  the  errors.  It  will 
always  be  well  for  an  auditor  under  such  circumstances  to 
be  cool,  deliberate,  and  close-mouthed.  He  should  not  be 
hasty  to  betray  his  suspicions.  There  should  be  nothing 
in  his  manner,  or  speech,  or  actions,  to  indicate  that  suspi- 
cions have  been  aroused,  until  the  proper  time  comes  for 
him  to  take  decisive  action.  He  should  fortify  himself 
with  all  the  evidence  available,  so  that  his  position  may  be 
impregnable,  and  that,  when  exposure  comes,  it  may  be 
thorough  and  complete,  and  the  guilty  officials  brought  to 
punishment  and  restitution  made. 

ERRORS  OF  OMISSION. 

It  is  difficult  to  lay  down  any  rule  by  which  errors 
of  this  kind  can  be  detected  with  absolute  certainty. 
Everything  will  depend  upon  the  intelligence,  the  expe- 
rience, and  the  determination  of  the  auditor.  An  audit 
may  be  thorough  and  correct  as  far  as  direct  cash  transac- 
tions are  concerned,  but  may  be  incomplete  in  the  state- 
ment of  assets  and  liabilities.  To  guard  against  errors 
of  omission  in  any  part  of  the  accounts,  each  item  should 
be  checked  as  far  as  possible  from  original  entries  or 

[192] 


AUDITING:   ITS  METHODS. 

sources  in  order  to  see  that  the  association  has  been 
charged  with  all  cash  received  and  liabilities  incurred. 
The  same  course  must  be  pursued  on  the  other  hand  with 
reference  to  all  cash  expenditures  and  to  all  credits.  It 
sometimes  happens  that  the  affairs  of  associations  become 
complicated  and  the  interests  of  stock-holders  seriously 
endangered  without  warning,  because  officials  have  been 
careless  in  their  accounts  in  these  respects,  and  auditors 
have  been  incompetent  or  negligent.  It  should  always  be 
borne  in  mind  that  an  auditor  is  one  who  audits,  and 
if  he  fails  in  any  particular  then  he  is  not  entitled  to  the 
official  name  which  he  bears. 

1.  Check  all  extensions  and  footings  in  the  original 
books. 

2.  Compare  each  entry  in  No.  1,  Members'  Pass  Book, 
with  No.  2,  Contribution  Book,  and  No.  4,  Members' 
Ledger. 

3.  Compare  each  entry  in  No.  3,  Withdrawal  Book, 
with  No.  4,  Members'  Ledger. 

4.  Compare  each  entry  in  No.  2,  Contribution  Book, 
with  No.  4,  Members'  Ledger. 

5.  Compare  each  entry  in  No.  2,  Contribution  Book, 
and  No.  3,  Withdrawal  Book,  with  No.  5,  Cash  Book. 

6.  Compare  No.  7,  Treasurer's  Receipt  Book,  Avith 
No.  2,  Contribution  Book,  and  also  with  No.  8,  Treas- 
urer's Cash  Book,  and  with  No.  3,  Withdrawal  Book. 

7.  Compare  totals  of  No.  5,  Cash  Book,  with  totals 
in  No.  6,  General  Ledger. 


[193] 


CHAPTER  XVIII. 

GENERAL  OUTLINE. 

The  accompanying  diagram  illustrates  the  posting  of 
different  items  from  book  to  book  until  each  reaches  its 
final  account.  In  this  graphic  way  the  entire  system  of 
building  association  accounts  is  illustrated  at  a  glance. 
Since  an  auditor  must  follow  these  postings  the  diagram 
will  be  valuable  as  a  guide. 

SHARE  CONTRIBUTIONS. 

A  few  suggestions  may  be  made  as  to  the  proper  method 
of  checking  up  the  dues  paid  in  by  the  shareholders : 

1.  The  members'  pass-books  should  be  examined  to 
see  that  each  has  been  issued  only  after  the  member  has 
complied  with  the  rules  for  admission,  whatever  they  may 
be,  paid  all  necessary  fees,  etc. 

2.  Pass-book  entries  of  dues,  fines,  etc.,  should  be 
checked  up  as  to  amounts  and  dates. 

3.  The  accounts  in  the  Members'  Ledger  should  be 
checked  against  the  pass-book  entries  to  see  that  all  items 
have  been  properly  posted. 

4.  The  contributions  of  each  deposit  account  in  the 
Contribution  Book  should  be  added  across,  and  the  totals 
should  be  compared  with  the  corresponding  entries  in  the 
Cash  Book. 

There  is  such  a  variety  of  methods  under  which  dues  are 
received  and  recorded  that  it  is  difficult  to  make  specific 
suggestions  that  will  cover  all  cases.  What  is  said  above 
will  be  sufficient  to  put  an  intelligent  auditor  upon  the 
right  track. 

[194] 


AUDITING:    ITS  METHODS. 


DIAGRAM  L 


Receipts. 


(S 

MEMBER'S 
PASS     BOOK. 


® 

INDIVIDUAL. 

SHARE   HOLDER'S 

LEDGER. 


® 

CASH    BOOK. 


Treasurer's 
Receipt. 


W 


OENEBAL     I.EIKJBB. 


^ 


Withdrawal 

Book 

or 

Order  Book. 


W 


Treasurer's 
Cash. 


[195] 


CHAPTER  XVIII. 

PROVING  A  CASH  BALANCE. 

The  cash  balance  as  shown  in  the  cash  book  and  verified 
by  the  bank  book  of  the  association,  with  a  proper  cer- 
tificate from  the  bank  and  the  auditing  committee,  should 
go  to  their  respective  depositories  for  an  actual  verifica 
tion  of  this  account.  In  those  cases  where  moneys  of  the 
association  are  involved,  outside  of  the  bank  account,  this 
should  be  verified  by  the  cash  being  produced  and  counted. 
In  case  the  audit  does  not  take  place  until  some  time  after 
the  end  of  the  term,  the  cash  on  hand  at  the  date  of  the 
audit  should  be  counted.  A  statement  should  be  prepared 
showing  receipts  and  expenditures  since  the  close  of  the 
term.  By  having  arrangements  for  the  audit  previous  to 
the  close  of  the  term,  this  last  expedient  will  not  be  neces- 
sary, and  an  element  of  uncertainty  will  be  removed,  for 
of  course,  if  any  fraud  were  being  planned,  it  would  be 
possible  to  manipulate  the  cash  account  at  the  close  of  the 
term  and  previous  to  the  date  of  the  audit,  so  as  to  show 
a  false  balance  when  the  term  closed. 

SECRETARY'S  CONTRIBUTION  BOOK. 

It  is  our  purpose  to  ^ive  illustrations  of  only  a  few 
forms  that  are  applicable  to  the  average  sized  association 
in  operation.  Those  doing  a  large  business  and  collecting 
dues  from  day  to  day  require  an  altogether  different 
system  for  their  work.  We  will  not  attempt  to  show  their 
styles  and  methods,  but  rather  the  method  of  the  average 
association  in  operation  in  the  United  States. 

The  following  diagram  shows  a  form  for  rulings, 
entries,  footings  and  postings  for  those  associations  that 

[196] 


AUDITING:    ITS  METHODS. 


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[197] 


CHAPTER  XVIII. 

collect  weekly  dues — the  quarterly  or  thirteen-weeks  con- 
tribution book.  The  detailed  description  and  use  of  this 
form  is  given  here  that  it  may  accompany  the  form,  not 
because  it  has  anything  to  do  with  auditing. 

The  sheets  are  ruled  for  fifty  numbers  on  a  double 
page,  or  folio,  and  are  numbered  consecutively  from 
1  to  50  (the  same  on  both  the  left  and  right-hand  page) 
and  from  51  to  100  or  00  on  the  next  double  page, 
both  left  and  right,  and  this  numbering  from  1  to  100 
is  continued  throughout  the  book.  For  the  second  and 
subsequent  hundred  numbers  the  secretary  simply  places 
20  before  the  first  nine  numbers  and  then  2  before  all 
the  balance  of  the  second  hundred,  and  this  is  repeated 
by  placing  in  a  similar  manner  3,  4,  and  5  before  the 
figures  for  the  subsequent  third,  fourth  and  fifth  hundred 
numbers  corresponding  to  the  number  of  pass-books 
issued. 

The  space  at  the  top  of  each  series  of  columns  (dues, 
interest,  premiums,  fines)  is  used  for  inserting  the  dates 
of  each  weekly  meeting.  The  weekly  deposits  are  entered 
in  their  proper  columns  and  at  the  close  of  each  meeting, 
when  receipts  are  all  in,  these  columns  are  footed  sep- 
arately, on  each  page  and  then  the  separate  totals  for  all 
the  pages  are  added  to  ascertain  the  totals  of  dues, 
interest  and  fines  and  these  totals  again  added  to  ascertain 
the  total  receipts  for  the  secretary.  If  the  grand  total 
balances  with  the  cash  received,  which  it  must  do,  the 
secretary  then  spreads  this  statement  of  receipts,  duly 
itemized,  upon  his  minutes,  and  subsequently  posts  the 

[198] 


AUDITING:    ITS  METHODS. 

items  to  the  proper  columns,  suitably  arranged,  in  his 
cash  book. 

At  the  end  of  the  quarter  (or  13  weeks)  each  number 
or  account  is  footed  across  the  double  page  into  the 
"Total"  column,  and  these  totals  are  posted  to  the  indi- 
vidual ledger  accounts. 

The  footings  of  these  total  columns  may  then  be  added 
for  as  many  pages  as  are  used,  and  then  verify  cash  book 
totals  with  them. 

The  space  at  the  top  of  each  series  of  columns  is  also 
used  by  some  secretaries  for  inserting  a  number  for  each 
meeting,  besides  the  date. 

When  the  association  gets  a  few  years  old  this  con- 
secutive numbering  of  the  meetings  becomes  very  useful 
in  ascertaining  quickly  the  amount  of  dues  any  member 
should  have  paid. 

For  instance :  a  borrower  starts  on  the  fifteenth  meet- 
ing, paying  $2.00  per  week,  and  the  secretary  wishes  to 
know  on  the  150th  meeting  how  much  this  borrower 
should  have  paid.  He  simply  subtracts  fourteen,  the 
number  before  the  one  on  which  he  began,  from  the 
150  and  gets  136,  and  this  multiplied  by  $2.00  gives  the 
total  payment  of  dues,  $272.00,  which  should  be  to  his 
credit.  If  the  credit  does  not  show  this  amount,  then 
whatever  amount  is  short,  indicates  the  amount  in  arrears. 

In  order  to  check  up  any  borrower's  payments  and  to 
avoid  looking  back  over  a  number  of  old  contribution 
books,  when  the  account  has  become  one  of  long  stand- 
ing, it  is  only  necessary  to  place  the  number  of  the  meet- 
ing on  which  the  borrower  started  on  his  page  in  the 

[199] 


CHAPTER  XVIII. 

individual  ledger  at  same  time  you  make  entry  of  his 
name  and  date  of  opening  his  account. 

This  number,  minus  one,  deducted  from  the  number  of 
present  meeting,  will  always  give  you  total  number  of 
payments  due.  This  is  not  an  important  matter  in  regard 
to  non-borrowers  and  so  far  as  they  are  concerned  may 
be  omitted. 

MONTHLY  SECRETARY'S  BOOK. 

The  following  diagram  shows  a  form  for  those  associa- 
tions that  collect  dues  monthly.  The  form  of  rulings, 
entries,  footings  and  postings  comprise  what  is  called  the 
contribution  book  arranged  for  twelve  months  or  one  year. 


[200] 


AUDITING:    ITS  METHODS. 


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Int.    1      :      :      : 

Dues.         :      .      : 

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Int.    1     :      :      : 

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Dues. 

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■  ^  M 

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Prem.  j      :      :      : 

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Adm.&l 
Trans.  1      ;       •       • 

II  Shares.      :      :      :  || 

i 

No. 

:      :      :ll 

1 

I  :   :   :| 

11 

1 

Fines. 

:      :      : 

Prem. 

M  ;   ^ 

Int. 

MM 

Dues. 

■   :  \ 

Fines. 

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Prem. 

\  ■■  \ 

Int. 

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Int. 

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i      :      : 

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[201] 


CHAPTER  XVIII. 

The  explanation  just  previously  given  for  the  detailed 
use  of  the  13  weeks  book  will  apply  to  this  monthly  book 
if  only  modified  to  suit  the  difference  in  the  times  of 
payment. 

SECRETARY'S  CASH   BOOK. 

An  association  must  have  some  way  of  bringing  all  its 
accounts  together,  so  that  they  may  be  properly  sum- 
marized and  balanced,  showing  total  receipt  from  dues, 
interest,  premiums,  fines  and  other  sundry  items.  This 
is  done  through  the  columnar  Cash  Book,  sometimes 
called  the  Itemized  Cash  Book,  or  Secretary's  Cash  Book. 

The  rule  of  debit  what  you  receive  and  credit  what  you 
pay  out,  holds  good  with  cash,  as  in  all  other  transactions. 
The  bulk  receipts  are  entered  in  their  respective  columns 
of  the  Cash  Book,  debiting  cash,  while  the  disbursements 
are  entered  in  their  respective  columns,  crediting  cash. 

The  method  of  checking  the  Cash  Book  is  illustrated  in 
the  diagram  on  the  following  page. 

TREASURER'S  CASH  BOOK. 

The  treasurer  keeps  this  book  for  his  own  convenience. 
In  it  he  enters  the  gross  receipts  of  each  meeting  and  all 
disbursements.  If  kept  posted  properly  it  shows  at  all 
times  the  exact  amount  of  cash  on  hand.  This  book  should 
be  checked  against  the  Treasurer's  Receipt  Book,  the 
Warrant  Book,  and  the  Bank  Book,  an  appropriate  check 
sign  being  placed  opposite  the  last  entries  in  each. 


[202] 


AUDITING:    ITS  METHODS. 


Treasurer's 
Receipt. 

Debited 


JDues 


Interest 


Premium 


Fines 


Admission 


Transfer 


DIAGRAM  CASH. 


Books 


Paid  on 
Mortgages 


Paid  on  Pass 
Book 


Paid  up  Stock 


Overs 


Sand.  Bills 


Contribution  Book 
Kepresents  Debits 
of  Cash  Account. 


CASH 
ACCOUNT. 


Order  Book 

Represents  Credits 

of  Cash  Account. 


Treasurer's 


Cash. 


Credited 


l^ithdrawisOs 


Lioans  on 
.Mortgages 


Loans  on 
Pass  Book 


Dividends 


Rxpensett 


SalaiT 


Interest 


Shorts 


Stationery 


Paid  up  Stock 
Withdrawn 


Sundries 


[203] 


CHAPTER  XVIII. 

MEMBERS'  LEDGER. 

In  checking  this  book  attention  must  be  given  to  the 
following  points : 

1.  The  account  of  each  shareholder  in  the  Ledger  must 
be  checked  by  comparison  with  the  entries  in  his  Pass 
Book.  A  sign  indicating  that  this  has  been  done  should  be 
placed  against  the  Ledger  entries,  and  also  opposite  the 
last  Pass  Book  entry. 

2.  Items  posted  from  the  Contribution  Book  should 
be  checked  by  amount,  date,  and  folio,  and  another 
appropriate  check  sign  should  be  placed  against  the  last 
entries. 

3.  Withdrawal  items  should  be  checked  against  the 
Members'  Pass  Book,  and  Warrant  Book. 

4.  The  Dividend  account  must  be  examined  to  see  that 
all  dividends  due  to  each  member  have  been  properly 
credited,  and,  if  drawn,  the  items  must  be  checked  against 
the  Warrant  Book. 

5.  All  miscellaneous  items,  such  as  assessments, 
rebates,  and  everything  of  that  character,  must  be  checked 
carefully  against  original  entries. 

WITHDRAWALS. 

Auditors  should  see  that  the  files  contain  properly 
signed  vouchers  from  withdrawing  members,  showing  the 
exact  amount  which  has  been  received.  The  signatures 
to  these  vouchers  should  be  compared  with  those  entered 
in  the  Constitution  Signature  Book,  if  such  a  Book  is 
kept ;  if  not,  he  must  verify  the  signature  to  his  own  satis- 
faction in  some  other  way. 

[204] 


AUDITING:   ITS  METHODS. 

In  checking  up  withdrawals,  he  should  note, — 

1.  That  applications  for  money  have  been  entered  in 
the  Withdrawal  Book  in  regular  chronological  order,  and 
that  they  have  been  acted  upon  in  this  order  by  the 
Directors  when  not  paid  immediately,  as  is  now  usually 
done. 

2.  That  all  warrants  for  the  payment  of  withdrawals 
correspond  with  the  dates  and  amounts  in  Cash  Book. 

3.  That  partial  withdrawals  are  properly  noted  in  the 
Member's  Pass  Book ;  and,  if  the  withdrawal  is  complete 
and  absolute,  that  the  Pass  Book  has  been  surrendered, 
and  the  fact  of  withdrawal  entered  therein. 

4.  That  amounts  paid  out  on  withdrawal  have  been 
charged  against  their  proper  accounts  in  the  Members' 
Ledger. 

GENERAL  LEDGER. 

This  is  a  very  important  book  in  connection  with  the 
accounts  of  the  association.  In  it  are  summarized  the 
details  of  all  the  other  books.  By  it  the  correctness  of  all 
the  other  accounts  is  to  be  finally  tested.  From  it  the 
Balance  Sheet  is  made  up.  It  tests  the  actual  condition  of 
the  association's  business,  indicating  the  assets  and  the 
liabilities,  the  profits  and  the  losses.  As  implied  in  its 
name,  the  accounts  of  this  Ledger  are  the  opposite  of  the 
individual  accounts  in  the  Members'  Ledger.  Herein  is 
applied  the  double  entry  principle  in  book-keeping.  Every 
debit  must  have  a  credit,  and  vice  versa. 

The  old  system  of  journalizing  is  now  generally  dis- 
carded, since  it  involves  a  great  deal  of  unnecessary  labor. 

[205] 


CHAPTER  XVIII. 

Under  the  later  methods  each  item  is  entered  immediately 
in  its  appropriate  account,  or  posted  from  the  books  of 
original  entry,  without  passing  through  the  Journal. 

Even  the  General  Ledger  is  now  dispensed  with  by- 
many  secretaries,  by  adopting  a  columnar  Cash  Book, 
described  on  a  previous  page. 

Building  association  accounts  differ  from  mercantile 
accounts  in  that  the  transactions  are  wholly  financial,  and 
are  uniform.  This  makes  possible  more  simple  methods  of 
book-keeping  in  certain  respects,  though  the  accounts  are 
very  intricate  on  account  of  the  character  and  multiplicity 
of  the  items.  But  the  same  principle  of  debit  and  credit 
must  still  lie  at  the  foundation  of  the  system,  and  the 
ultimate  result  of  book-keeping  must  show  the  total  assets 
and  liabilities,  and  the  profits  and  losses  correctly.  If  th^ 
summarized  items  under  these  heads  fail  to  balance,  then 
there  is  something  wrong  with  the  accounts. 

The  general  accounts  necessary  are  as  a  rule  as  they 
appear  in  the  secretary's  balance  sheet  on  a  subsequent 
page. 

ASSETS  AND  LIABILITIES. 

The  assets  and  liabilities  may  have  some  such  classifica- 
tion as  follows — also  shown  in  secretary's  balance  sheet: 

ASSETS.  LIABILITIES. 

Cash  on  hand,  Running  stock  and  dividends, 

Loans  on  mortgage  security,  Paid-up  stock  and  dividends. 

Loans  on  stock  security,  Deposits  and  interests. 

Furniture  and  fixtures,  Fund  for  contingent  losses, 

,    Real  estate,  Borrowed  money. 

Due  for  insurance  and  taxes.  Undivided  profits, 

Other  assets,  in  detail.  Other  liabilities,  in  detail. 

[206] 


AUDITING:    ITS  METHODS. 

The  schedule  must  be  sufficiently  comprehensive  in  its 
details  to  include  everything,  and  the  audit  must  be  so 
conducted  as  to  trace  every  item  into  this  schedule  so  that 
each  summary  may  be  fully  verified. 

The  amount  by  which  the  assets  may  exceed  the  liabil- 
ities is  usually  called  the  Reserve  Fund  and  Undivided 
Profit   Account. 

The  amount  by  which  the  liabilities  may  exceed  the 
assets  is  usually  called  Shortage  or  Deficiency. 

AUDITOR'S  REPORT  ON  SPECIAL  MATTERS. 

Where  everything  is  found  correct  and  in  good  form  the 
auditor's  regular  certificate  is  usually  about  all  that  he 
need  file  in  the  way  of  a  report.  In  some  cases,  although 
he  may  sign  the  regular  certificate,  there  may  be  some  mat- 
ters to  which  he  may  deem  it  necessary  to  call  the  attention 
of  the  shareholders.  In  deciding  as  to  whether  or  not  he 
should  make  any  report  on  such  special  matters,  or  should 
make  any  incidental  suggestions,  he  must  be  guided  by 
what  may  seem  to  him  to  be  necessary  for  the  welfare  of 
the  association.    A  few  illustrations  may  be  suggestive : 

The  auditor  may  difYer  with  the  secretary  or  the  direc- 
tors upon  some  matter  which  may  be  of  importance  to  the 
interests  of  the  association.  If  so,  he  should  state  the 
matter  plainly  so  that  it  may  be  clearly  understood,  being 
careful,  however,  not  to  be  too  elaborate  and  therefore 
tedious,  and  should  give  illustrations  when  possible. 

He  might  find  that  the  secretary  or  other  officer  was 
underpaid  or  overworked,  and  might  think  it  better  for  the 
association  if  this  were  corrected. 

[207] 


CHAPTER  XVIII. 

He  might  discover  that  the  officers  were  not  afforded 
proper  facilities  for  transacting  the  association's  business 
and  that  its  interests  were  in  consequence  crippled  or 
jeopardized,  and  could  make  some  recommendation. 

He  might  find  that  the  system  for  filing  and  caring  for 
mortgages,  insurance  policies,  notes,  and  other  papers,  was 
not  a  good  or  safe  one. 

Many  other  such  incidental  matters  might  claim  his 
attention. 

In  making  special  reports  on  any  miscellaneous  matters 
an  auditor  should  act  deliberately.  He  should  be  careful 
not  to  do  anything  which  might  be  used  to  the  dis- 
advantage of  the  association  or  its  officers  by  some  dis- 
gruntled or  unwise  member,  or  some  officious  or  antag- 
onistic outsider. 

In  any  case  where  he  finds  that  the  accounts  and  records 
are  grossly  inaccurate  and  incomplete,  either  through 
carelessness,  incompetency,  or  a  purpose  to  deceive  on  the 
part  of  the  officers,  his  duty  is  plain.  He  must  not  only 
withhold  his  certificate  but  must  report  facts  as  he  finds 
them  to  the  association. 

AUDITOR'S  CERTIFICATE. 

When  the  Auditor  has  completed  his  task,  if  he  has 
found  everything  correct,  he  should  prepare  and  sign  a 
certificate  in  some  such  form  as  follows: 


[208] 


AUDITING:   ITS  METHODS. 

To  THE  Shareholders  of  the 

Building  and  Loan  Company. 
I  have  carefully  examined  the  books,  vouchers,  cash,  and  accounts 
of  your  Association,  and  find  the  same  to  correspond  with  the  Balance 

Sheet  as  presented  under  date  of 

I  also  find  the  present  condition  of  the  Association  to  be  correctly 
presented  in  said  Balance  Sheet. 

Respectfully, 
,   Auditor. 

SAFETY  INSURED. 

The  suggestions  here  made  are  sufficient  to  put  an  inex- 
perienced auditor  on  his  guard,  and  also  to  indicate  to 
members  something  of  what  is  involved  in  an  audit,  and 
to  show  the  character  of  person  that  should  be  appointed 
as  auditor. 

If  auditing  were  always  faithful  and  efficient  it  would 
saye  much  trouble,  anxiety,  and  loss  to  members.  Even  if 
the  account  is  correct,  or  if  there  are  unintentional  errors 
in  it,  it  is  only  regular  and  competent  auditing  that  will 
insure  permanent  confidence  in  the  association  on  the  part 
of  members  and  of  the  public.  There  always  are  apt  to  be 
a  few  members  at  least,  and  not  a  few  outsiders,  who  look 
upon  an  association  with  more  or  less  distrust.  If  such  as 
these  see  that  the  affairs  of  an  association  are  regularly 
and  systematically  investigated,  then  their  confidence 
sooner  or  later  becomes  established.  Under  such  a  system 
officials  would  soon  learn  that  it  was  impossible  to  secure 
the  auditor's  certificate  to  unreliable  and  incorrect  accounts 

[209] 


CHAPTER  XVIII. 

and  statements,  and  shareholders  would  understand  that 
the  practice  of  any  fraud  upon  them  would  be  impossible. 

By  the  adoption  of  some  such  system  of  auditing  as  is 
here  presented,  shareholders  make  such  provisions  and 
take  such  precautions  as  will  render  mistakes  well  nigh 
impossible.  They  have  delegated  authority  to  two  rep- 
resentative bodies,  each  of  which  acts  as  a  check  upon  the 
other.  The  board  of  directors  is  an  administrative  body; 
the  auditor  or  auditors  constitute  a  supervising  and 
reviewing  department. 

The  directors  and  secretary  are  compelled  to  be  watch- 
ful, for  they  know  all  their  work  will  be  under  critical 
review. 

The  auditor  must  prove  himself  competent  and  do  his 
work  faithfully,  or  his  inefficiency  will  be  apparent  in  th« 
course  of  time. 

STATE  SUPERVISION. 

So  many  citizens  are  entrusting  their  earnings  to  tht 
care  of  building,  loan  and  savings  associations,  and  the 
aggregate  capital  which  they  have  accumulated,  has  be* 
come  so  large  that  some  form  of  state  supervision  has 
become  a  necessity. 

With  the  growth  of  these  associations  there  came  a 
demand  for  proper  and  stated  examinations  by  duly 
appointed  officers  of  the  state.  In  some  states  regular 
building  and  loan  departments  have  been  created.  In  other 
states  they  have  been  added  to  the  banking,  insurance, 
auditor  of  public  accounts,  and  departments  of  a  like 
nature.     It  is  our  opinion  that  each  state  should  have  its 

[210] 


AUDITING:     ITS  METHOD. 

own  regular  building,  loan  and  savings  department.  The 
great  good  that  has  been  accomplished  by  these  depart- 
ments for  the  benefit  of  the  movement  must  not  be  under- 
estimated. It  has  given  to  the  public  correct  statistics,  has 
detected  mismanagement,  has  devised  better  systems  oi 
book-keeping  and  has  been  of  material  assistance  in  many 
directions. 

But  state  supervision,  so  far  as  it  has  yet  been  developed, 
does  not  remove  the  necessity  for  private  auditing.  Indeed, 
it  enforces  this  necessity,  and  this  is  its  object.  A  state 
supervising  official  does  not  take  the  place  of  the  regular 
auditor.  While  it  is  made  the  duty  of  the  state  officials 
to  make  personal  examination  of  the  business  of  associa- 
tions, not  alone  at  regular  stated  periods  but  also  at 
irregular  and  unexpected  times,  still  it  remains  for  the 
management  of  the  associations  to  see  that  proper  audit- 
ing g^oes  hand  in  hand  with  the  examinations  that  are  now 
made  by  state  officials. 

It  is  to  be  hoped  that  the  various  officers  of  the  different 
states  having  in  charge  this  work  will  organize  a 
permanent  organization  among  themselves,  so  that  with 
closer  communication  and  exchange  of  ideas  the  efficiency 
of  these  departments  can  be  greatly  enhanced. 


[211] 


CHAPTER  XIX. 


Reports. 


THEIR  NECESSITY. 


One  of  the  chief  arguments  in  favor  of  the  building 
association  as  a  saving  society  is  that  it  is  managed  by 
the  members  themselves,  and  that  they  may  therefore 
dt  all  times  know  exactly  what  is  being  done  with  their 
money,  and  also  the  condition  of  the  association.  Mem- 
bers can  gain  this  knowledge  only  through  the  regular 
periodical  publication  of  reports.  The  issuing  of  such 
reports,  therefore,  is  one  of  the  most  important  duties  of 
the  officers  of  an  association.  Consequently  the  im- 
portance of  preparing  and  publishing  correct  reports  of 
the  business  transactions — with  itemized  exhibits  of  all 
receipts  and  disbursements,  together  with  all  informa- 
tion as  to  the  details  of  its  affairs — cannot  be  too  strongly 
urged  upon  the  officers  of  an  association. 

In  order  that  a  report  shall  be  of  the  highest  value 
it  is  necessary  that  not  only  shall  it  be  accurate,  but 
that  it  shall  be  published  at  sufficiently  short  intervals 
to  enable  the  members  to  keep  the  run  of  the  business 
in  their  minds,  and  also  to  give  them  opportunity  to 
take  steps,  when  necessary,  to  correct  any  evils  that  may 
be  found  to  exist.     Such  reports  should  be  rendered  at 

[212] 


REPORTS. 

least  once  every  six  months,  and  a  copy  should  be  placed 
in  the  hands  of  each  member. 

If  an  association  is  properly  conducted  and  its  business 
is  in  a  prosperous  condition,  not  only  will  the  circula- 
tion of  reports  give  satisfaction  to  its  members,  but  they 
may  be  used  for  advertising  purposes,  and  in  this  way 
additional  members  may  be  brought  in  and  the  prosperity 
and  usefulness  of  the  association  increased.  The 
knowledge  that  reports  must  be  printed  and  circulated  at 
stated  periods  tends  to  put  both  officers  and  members 
upon  their  mettle,  and  thus  insures  better  management 
for  the  association.  Every  one  connected  with  an  associa- 
tion feels  a  just  pride  in  their  ability  to  present  so 
favorable  a  report. 

On  the  other  hand,  if  an  association  is  not  prosperous, 
the  sooner  and  the  more  completely  this  fact  is  made 
known  to  its  members,  the  better  it  is  for  all  concerned. 
If  the  evils  found  to  exist  are  curable,  they  may  be 
remedied  promptly,  and  the  association  be  put  upon  a 
better  basis.  If  they  are  incurable,  steps  may  be  taken 
to  wind  up  the  association  before  its  affairs  become 
seriously  involved.  Under  such  circumstances,  moreover, 
the  public  would  be  warned  by  the  publication  of  an 
accurate  report,  and  outsiders  thus  would  not  become 
involved  by  becoming  members. 

LEGAL  REQUIREMENTS. 

So  important  is  this  matter  of  reports  that  many  of 
the  states  have  enacted  statutes  requiring  that  such 
reports   shall  be  made,  and  outlining  their   form  and 

[213] 


CHAPTER  XIX. 

character.  To  quote  in  full  the  statutory  provisions  of 
the  different  states  which  relate  to  this  subject,  and  to 
enter  into  a  comparison  and  discussion  of  them,  would 
be  foreign  to  the  purpose  of  this  work. 

PREPARATION  AND  PUBLICATION  OF  REPORTS. 

Whether  the  statutes  require  periodical  reports  to  be 
made  or  not,  such  reports  are  provided  for  in  the  constitu- 
tion, by-laws,  and  rules  of  the  associations  themselves. 
In  these  provisions  the  form  of  the  report  is  outlined  in  a 
general  or  specific  way,  and  also  the  method  of  its  publica- 
tion. The  exact  form  in  which  the  report  of  any  associa- 
tion shall  be  presented  and  the  method  of  its  publication 
must  therefore  be  determined  by  the  statutory  require- 
ments and  by  its  own  rules.  It  should  be  so  com- 
prehensive in  scope  and  elaborate  in  detail  as  to  make  it 
self-explanatory.  It  is  also  very  desirable  that  reports  be 
printed,  so  that  they  may  be  readily  available  for  exam- 
ination by  all  members  and  other  persons  interested. 

The  chief  part  of  the  work  in  the  preparation  of  a 
report  usually  devolves  upon  the  secretary.  Promptly,  at 
the  close  of  each  fiscal  term,  the  secretary  should  present 
a  properly  formulated  and  tabulated  report  of  the  business 
of  the  entire  term  to  the  directors.  The  directors  should 
refer  it  to  the  auditing  committee  for  examination  and 
verification.  When  the  directors  and  officers  are  satisfied 
that  the  report  is  correct,  the  secretary,  or  the  secretary 
and  the  president  if  so  required,  should  make  oath  or 
affirmation  to  its  correctness.     It  is  advisable  that  the 

[214] 


REPORTS. 

report  when  completed  be  published  in  the  newspapers  or 
printed  in  convenient  form  before  the  meeting  of  the 
stockholders  at  which  it  is  to  be  presented,  so  that  each 
member  may  have  full  opportunity  to  examine  it  and  to 
learn  the  exact  standing  of  the  association  and  the  condi- 
tion of  its  business. 

SECRETARY'S  BALANCE  SHEET. 

An  examination  of  the  reports  of  numerous  associa- 
tions shows  that  the  accounts  most  generally  carried  by 
secretaries  are  as  shown  in  the  following  balance  sheets 
which  are  printed  here  as  a  suggestive  guide  for  the 
officers  of  new  associations — the  first  one  being  that  of 
a  serial  association  and  the  second  one  that  of  a  permanent 
association : 


2Io 


CHAPTER  XIX. 

SPECIMEN   REPORT— SERIAL  PLAN  ASSOCIATION. 
TWENTY^EVENTH  ANNUAL  STATEMENT 


Savings,  Loan  and  Building  Ass'n 


For  the  year  ending  December  31,  1910. 


RECEIPTS. 

Installments    (dues) $  55,827  00 

Interest     18,879  80 

Fines    242  90 

Membership    fees 158  60 

Transfer   tees 10  50 

Matured  stock 10,300  00 

Rents    394  40 

Loans  repaid  and  matured  64,760  00 

Sale  of  real  estate 6,720  72 

Bills    payable 4,472  35 

Bills    receivable 8,000  00 

Outstanding   orders 1,000  00 

From  Treasurer 3,707  35 

Total    $168,968  62 

ASSETS. 

Loans  to  stockholders $308,250  00 

Installments   unpaid 1,755  50 

Interest  unpaid 921  00 

Fines  unpaid 35  95^ 

Real  estate 7,200  00 

Real    estate    sold    on    con- 
tract     3,386  00 

Furniture  and  stationery. .  200  00 

Total    $316,747  45 


DISBURSEMENTS. 
By    balance    of    last   state- 
ment      $  3,791  49 

Loans   on    real    estate    and 

shares    7^,200  00 

Installments  withdrawn  and 

matured    48,769  00 

Interest  on  stock  withdrawn 

and  matured 13,987  72 

Expenses    2,647  85 

Taxes,  insurance  and  repairs  341  70 

Real  estate  sold  on  contract  385  00 

Real   estate 606  41 

Bills  payable 7,734  85 

Bills    receivable 3,000  00 

Matured  stock 8,500  00 

Total    $168,963  62 

LIABILITIES. 

Installments  paid  on  stock. $217,543  50 
Ad.    Pay.    dues   $9523.50— 

inter.    $53.75 977  25 

Installments    due 1,755  50 

Matured    stock 33,000  00 

Bills   payable 2,692  35 

Due   Treasurer 3,707  35 

Outstanding   orders 1,000  00 

Contingent   fund 11,660  00 

Profit    44,411  50 

Total    $316,747  45 


SERIES  OF  STOCKS,  VALUES,  ETC. 


Time  in 

Shares  in 

Shares 

Dues  Paid 

Profit 

Value 

Series 

Mos. 

Force 

Loaned  on 

Per  Share 

Per  Share 

Per  Share 

17 

132 

266 

74^ 

$66  00 

$22  94 

$88  94 

B 

128 

35 

34^ 

64  00 

21  40 

85  40 

C 

124 

10 

10 

62  00 

20  08 

82   08 

18 

120 

385 

47 

60  00 

18  79 

78  79 

B 

116 

9 

sVi 

58  00 

17  57 

75  57 

ID 

108 

339 

36  J4 

54  00 

15  23 

69  23 

B 

104 

132 

22 

52   00 

14  12 

66  12 

C 

100 

7 

eVz 

50  00 

13  06 

63   06 

20 

96 

324 

24 

48  00 

12  OS 

60  03 

B 

92 

19 

8^ 

46  00 

11  05 

57  05 

C 

88 

90 

10 

44  00 

10  11 

54   11 

21 

84 

400 

22 

42   00 

9  21 

51  21 

B 

80 

37 

36  J4 

40  00 

8  36 

48  36 

C 

76 

165 

120 

38  00 

7  64 

45  64. 

[216] 


REPORTS. 


Time  in 

Shares  in 

Shares 

Dues  Paid 

Profit 

Value 

Scries 

Mos. 

Force 

Loaned  on 

Per  Share 

Per  Share 

Per  Share 

«2 

72 

478 

66^ 

36 

00 

6 

77 

42  77 

B 

68 

123 

123 

34 

00 

6 

04 

40  04 

c 

•4 

48 

48 

32 

00 

5 

36 

37  se 

iS 

60 

513 

50 

30 

00 

4 

70 

34    ,0 

B 

56 

145 

142 

28 

00 

4 

09 

32  09 

C 

62 

»2 

90J4 

26 

00 

3 

53 

29  53 

24 

48 

&56 

104 

24 

00 

3 

00 

27  00 

R 

44 

188 

187  V4 

22 

00 

2 

52 

24  52 

C 

40 

147 

146  V4 

20 

00 

2 

09 

22  09 

26 

86 

685 

12554 

18 

00 

1 

69 

19  69 

R 

82 

193 

192^ 

16 

00 

1 

S3 

17  38 

c 

29 

89 

88  J^ 

14 

00 

1 

02 

15  02 

20 

24 

991 

211 

12 

00 

75 

12  75 

B 

20 

290 

289^ 

10 

00 

52 

10  52 

C 

16 

102 

102 

8 

00 

33 

8  S3 

27 

12 

1094 

119^ 

6 

00 

19 

6  19 

B 

8 

310 

807 

4 

00 

08 

4  08 

C 

4 

210 

208 

2 

00 

02 

2  02 

SUMMARY 

OF  THE 

BUSINESS    OF   THE  ASSOCIATION 


For  the  past  twenty-seven  years. 


BECEIPTS. 


From    dues $1,219  846  25 

From  interest   

329,931  80 

From   premiums 

56,342  47 

From     fines 

6,089  40 

From  membership   fees .  . 
From    transfer    fees 

3,961  60 

367  75 

From     loans    repaid    and 

matured    

1,206,675  00 

From     rents 

10,503  33 

From     taxes     and     insur- 

ance repaid 

1,018  69 

From   safe 

130  00 

From  sale  of  real  estate.. 

56.123  47 

From  real  estate  contracts 

3,293  00 

From  bills  payable 

41,850  95 

From  bills  receivable.... 

3,740  00 

From  matured  stock 

45,200  00 

Balance   due  Treasurer.. 

4,707  35 

DISBURSEMENTS. 
For  loans  to  stockholders.$l,509,925  00 
For  stock  withdrawn  and 

matured    1,001,814  50 

For  interest  and  profit  on 

stock     withdrawn     and 

matured     286,738  89 

For  fixtures,  furniture,  etc.  824  82 

For   expenses 67,099  27 

For   taxes   and   insurance 

advanced    2,732  76 

For   real  estate  and  cert. 

of  purchase 45,516  62 

For    real    estate    sold    on 

contract    24,682  00 

For  taxes,  insurance  and 

repairs    6,050  60 

For  bills  payable 89,158  60 

For  bills  receivable 8,740  00 

Matured   stock 12,500  OO 


Total    $2,989,783  06 


Total    $2,989,783  06 


State  of County  of ,  ss. 

Secretary  of  the    Savings,  Loan  and  Building 

Asssociation,  being  first  duly  sworn  upon  his  oath,  deposes  and  says  that  the 
foregoing   statement   is   a    full,    complete   and   true   statement   and   report   in   all 

particulars  of  the    Savings,   Loan  and  Building  Association  for  the 

fiscal  year  ending  December  31,  1910,  and  that  the  answers  to  the  questions 
herein  are  true  to  the  best  of  his  knowledge  and  belief.  

Subscribed  and  sworn  to  before  me  this  31st  day  of  December,  A.  D.  1910. 
[SEAL]  Notary  Public. 

We.    the    undersigned    stockholders    but    not    officers    of   the    

Saying,  Loan  and  Building  Association,  hereby  certify  that  the  foregoing  state- 
ment is  true  in  all  particulars,  to  the  best  of  our  knowledge  and  belief. 

AUDITING  COMMITTEE. 

Dated  at this  31st  day  of  December,  A.  D.  1910. 

[217] 


REPORTS. 

SPECIMEN  REPORTS. 

These  are  not  given  as  models,  but  simply  as  illustra- 
tions of  the  forms  in  which  reports  are  presented.  The 
reports  given  possess  some  very  commendable  features. 

While  the  particular  form  which  a  report  shall  take 
is  governed  chiefly  by  the  requirements  of  the  statutes 
and  the  rules  of  the  association,  yet  the  taste  and  judg- 
ment of  the  secretary  and  the  directors,  custom,  and  the 
circumstances  of  the  association  at  the  time  the  report  is 
made,  may  give  it  special  features  of  interest.  As  will  be 
seen,  the  reports  printed  are  mostly  all  tabulated  matter. 
Every  report  should  include,  in  addition  to  tabulated  and 
summarized  statements  of  this  character,  such  miscel- 
laneous statements  and  information  as  are  of  special 
interest  to  the  members  and  friends  of  the  association. 
Many  secretaries  make  their  reports  of  great  interest  and 
value,  and  in  this  way  add  much  to  the  popularity  and 
success  of  their  associations. 

As  already  said,  an  association,  to  attract  membership 
and  business,  must  be  advertised  in  a  community,  and  the 
best  method  for  doing  this  is  by  the  general  circulation 
of  well  prepared  reports,  giving  full  and  explicit  informa- 
tion in  reference  to  its  business  and  methods.  Secretaries 
and  directors,  in  the  preparation  and  publication  of 
reports,  should  bear  this  advertising  feature  in  mind,  and 
should  arrange  reports  so  as  to  be  used  in  this  way. 

It  is  quite  evident  from  an  examination  of  this  subject 
that  there  is  necessity  in  most  of  the  states  for  additional 
legislation  in  reference  to  this  matter,  and  much  room 
for  improvement  in  the  practice  of  many  associations  in 
the  way  of  making  reports. 


CHAPTER  XIX. 

Semi- Annual  Report 

of  The Building  and  Loan  Association, 

from to 


RECEIPTS. 

Balance  Cash  on  hand $. 

Dues 

Mortgage   Account 

Note   Account 

Interest 

Premiums     

Fines    

Admission   Fees 

Books 

Transfer  Fees 

Paid-iip   Stock 

Cash  Over 

Sundries    


Total  $, 

LOSS. 
Books    $. 


Rent 

Salaries    

Advertising    

Incidental    Expenses. 
Dividend    Declared.. 

Reserve  Fund 

Shortage   


Total  $. 

ASSETS. 

Loans  secured  by  Mortgage $ . 

Books    

Stationery 

Safe  t  i  j.v».n  k W  J" 

Cash  on  Hand 


DISBURSEMENTS. 

Dues  Account $. 

Mortgage  Account 

Note   Account 

Loans  on  Books 

Salaries    

Rent    

Books 

Reserve  Fund  Account 

Advertising   

Incidental    Expenses 

Paid-up  Stock 

Cash    Short 

Sundries   

Dividends 

Balance  in  Cash 


Total  $. 

GAIN. 

Admission   Fees $. 

Books    

Interest  

Premiums 

Transfer  Fees 

Fines . 

Surplus 


Total  $. 

LIABILITIES. 

Due  to  Members $. 

Dividends    

Reserve  Fund  Account 


Total  $ 

Total  Number  of  Stockholders. 
Total  Number  of  Shares 


Total 


.  Secretary. 


Approved : 


Auditing  Committee. 

\ 


[219] 


CHAPTER  XIX. 

SPECIMEN  REPORT— PERMANENT  PLAN 
ASSOCIATION. 


ASSETS. 

Cash  on  hand $ 

Loans  on  mortRaRe  se- 
curity      1,078,310  72 

Loans  on  all  other  se- 
curity     

Real    estate 

Real  estate  sold  on  con- 
tract            11,169  73 

Bills    receivable 173  00 


19,577  89 


28,700  cm 

10,098  93 


LIABILITIES. 
Running   stock   and   divi- 
dends     $1,087,867  M 

Reserve    fund 54,700  00 

Undivided  profit  fund...  5,462  86 


Total    $1,148,030  ^7 


RECEIPTS. 

Cash  on  hand  at  close  of 
last  fiscal  year $ 

Dues  on  running  stock . . 

Loans  on  mortgage  se- 
curity   repaid 

Loans  on  all  other  security 

Bills    receivable 

Real  estate  sold 

Real  estate  sold  on  con- 
tract  

Interest    

Pass-books  and  initiation 
fees    

Rents  from  company's 
real   estate 


31,145  45 

176,977  93 

167,922  15 

600  00 

532  00 

525  00 

2,250  56 

65,780  82 

258  00 

418  07 


Total    $1,148,030  2T 

DISBURSEMENTS. 

Loans  on  mortgage  se- 
curity     $    249,480  82 

Withdrawals  on  contracts  285  60 

Withdrawals    on    running 

stock     169,825  93 

Interest   paid   during  the 

year    150  09 

Undivided    profits 200  00 

Expense    6,939  66 

Cash  on   hand 19,577  89 


Total    $    446,409  9« 


LOSS. 


on      running 


Dividends 
stock    . . 

Dividends  on  loans 

Dividends  on  contracts . . 

Reserve    fund 

Expense    

Undivided  profit  fund. . . 


53,244  67 

806  74 

3  61 

3,000  00 

6,939  65 

2,784  76 


Total    $    446,409  98 

GAIN. 

Interest    $      66,103  3« 

Pass-books   and   initiation 

fees    258  00 

Rents  from  company's  real 

estate    418  OT 


Total    $      66,779  43 


Total 


,779  43 


The  State  of County  of ,  ss, 

,    being    duly    sworn,    says    that    he    is    the    Secretary    of    the 

Loan  and  Building  Association  of  Hamilton,  and  that  the  fore- 
going report  of  the  financial  affairs  of  said  Association,  is  true  and  correct,  and 
corresponds  with  the  asscounts  in  said  Association.  Sec. 

Signed  in  my  presence  and  sworn  to  before  me  this  28th  day  of  December, 

A.  D.  1910  Notary  Public, County,   

rSEALl 

December  •'^l.  1910. 

We,   the  undersigned   auditing  committee  of   said    Loan   and 

Building  Association  of Ohio,  do  hereby  certify  that  the  foregoing 

is  a  true  and  correct  statement  of  the  financial  condition  of  the  said  Company 
on  the  31st  day  of  December,  1910,  and  a  true  statement  of  its  affairs  and 
business  for  the  fiscal  year  ending  on  that  day. 

AUDITING  COMMITTEE. 


[220] 


CHAPTER  XX. 


Rebate  and  Compound  Interest  Tables. 


TABLE  No.  1.— REBATE  PERMANENT  PLAN. 

Showing  the  Course  and  Results  of  a  Loan  of  Two  Shares  of 
$500.00  Each,  or  $1,000.00. 

Prepared  by  W,  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Payments  of  dues,  50c.  per  share;  $1.00  per  week;  $26.00  every 
6  months.  Payments  of  interest,  60c.  per  share;  $1.20  per  week; 
$31.20  every  6  months.  Payments  of  $52.00  each  year  is  credited  on 
the  mortgage,  reducing  the  interest  at  6%  per  annum,  or  6c.  per 
week,  or  $1.56  each  6  months— $3.12  each  year. 

The  average  value  of  the  2  shares  first  6  months  in  each  year  is 
$13.00.  The  average  vaUie  of  the  2  shares  second  6  months  in  each 
year  is  $39.00.  25^%  dividends  on  these  average  values  is  32c  and 
97c  respectively. 


.a 

.e 

M^ 

o 

*i  *^ja 

2 

1 

i 

<nQ<o 

Total 
paid  on 
loan  ea< 
year. 

Bal.  du 
on  Mor 
end  eac 
year 

Interes 
paid 
each  6 
months 

End  of  26  weeks 

$26  00 

82 

$31  20 

1st  

*•   52   " 

52  00 

97 

$52  00 

$948  00 

81  20 

"   26   •♦ 

26  00 

82 

29  64 

2d  

"   52   " 

52  00 

97 

52  00 

896  00 

29  64 

"   26   " 

26  00 

82 

28  08 

8d  

"   52   " 

52  00 

97 

52  00 

844  00 

28  08 

«'   26   " 

26  00 

32 

26  52 

4th  

"   52   " 

52  00 

97 

52  00 

792  00 

26  52 

"   26   " 

26  00 

82 

24  96 

6th  

"   52   •• 

52  00 

97 

52  00 

740  00 

24  96 

"   26   " 

26  00 

32 

23  40 

«th  

"   52   " 

52  00 

97 

52  00 

688  00 

28  40 

"   26   " 

26  00 

82 

21  84 

7th  

"   52   " 

52  00 

97 

52  00 

636  00 

21  84 

"   26  " 

26  00 

82 

20  28 

8th  

"   52  " 

52  00 

97 

52  00 

584  00 

20  28 

"      26   " 

26  00 

82 

18  72 

9th  

"   52   •• 

52  00 

97 

52  00 

532  00 

18  72 

"   26   " 

26  00 

32 

17  16 

10th  .... 

"   52   " 

52  00 

97 

52  00 

480  00 

17  16 

"   26   " 

26  00 

32 

15  60 

11th  

"   52   " 

52  00 

97 

52  00 

428  00 

15  60 

"   26   " 

2«  00 

82 

14  04 

12th  .... 

"   52   " 

52  00 

97 

52  00 

376  00 

14  04 

"   26   " 

26  00 

82 

12  48 

13th  .... 

"   52   " 

52  00 

07 

52  00 

324  00 

12  48 

"   26   " 

"   52   " 

26  00 
52  00 

82 

52  00 

272  00 

10  92 

17  09 

578  76 

14th  

97 

10  92 

"   26   " 

26  00 

32 

9  36 

15th  

"   52   " 

52  00 

97 

52  00 

220  00 

9  36 

"   26   " 

26  00 

32 

7  80 

16th  

"   52   " 

52  00 

97 

52  00 

168  00 

7  80 

"   26   " 

26  00 

32   1 

6  24 

17th  .... 

"   52   " 

52  00 

97 

52  00 

116  00 

6  24 

"   26   " 

20  00 

32 

4  68 

18th  .... 

"   52   " 

52  00 

97 

52  00 

64  00 

4  68 

"   26   " 

26  00 

82 

3  12 

l»th  

u         41    « 

41  00 

41  00 

23  00 

2  46 

I $23  54   I   $977  00     | 


I   $651   42 


CHAPTER  XX. 

EXPLANATION  AND  REMARKS. 

Total  length  of  time,  18  years,  9  months  and  two  weeks,  or  977 
weeks. 

Total  amount  paid  as  dues $   977  00 

Total  amount  of  dividends 23  54 

Total  amount  of  credits $1,000  54 

Less  amount  dues  already  applied  on  mortgage 977  00 

$     23  54 
Less  amount  dividends  transferred  to  mortgage 23  00 


$  54 

The  company  will  now  pay  the  borrower  54  cents  and  return  his 
cancelled  mortgage  in  full  settlement. 

Now,  how  about  the  interest  account,  the  rebates  and  the  cost 
of  the  loan  ?  There  has  been  considerable  confusion  and  misunder- 
standing— as  well  as  misstatements  on  these  points.  If  the  borrower 
had  taken  a  straight  loan  on  the  basis  of  the  interest  charged  in  the 
above  table  it  would  have  cost  him  in  interest  977  times 

$1.20  or   $1,172  40 

But  he  actually  paid  according  to  the  table  only 651  42 

Leaving  an  amount  which  represents  his  rebates  of $     520  98 

In  addition  to  the  above  he  was  credited  with  current  divi- 
dends of  23  54 

Making  a  total  earning  on  the  money  he  saved  of 544  52 

The  interest  he  actually  paid  on  his  loan  was $   651  42 

The  interest  he  earned  on  the  money  he  saved  was 544  52 

The  actual  difference  in  interest  is  the  gross  earnings  to  the 

company    $    106  90 

This  $1'06.90  is  not  what  the  loan  of  $1,000.00  from  the  building 
association  cost  the  borrower,  but  rather  the  difference  in  cost  be- 
tween what  he  paid  them  for  $1,000.00  and  what  they  paid  or  allowed 
him  on  the  $1,000.00  he  save  and  returned  to  them  in  installments. 
In  other  words,  his  money  simply  was  not  worth  quite  so  much  in 
interest  as  the  interest  he  paid  the  association  on  their  money. 

You  must  bear  in  mind  that  when  the  borrower  began  the  loan 
there  was  only  $1,000,00  involved,  but  when  the  transaction  was  con- 

[222] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

summated  and  the  money  repaid,  the  building  association  not  only 
received  their  $1,000.00  back,  but  he  then  had  $1,000.00  in  his  home  that 
he  didn't  have  when  he  started.  We  have  $2,000.00  at  the  end  of  the 
term,  where  we  only  had  $1,000.00  at  the  beginning. 

Probably  another  statement  of  the  case  will  make  it  clearer.' 

Suppose  that  A  deposits  $1,000.00  with  an  association  which 
agrees  to  pay  him  5%  per  annuam,  or  $50.00  interest,  and  that  they 
then  loan  this  money  to  B  at  $1.20  per  week,  or  for  $62.40  for  the 
year.  The  association  then  makes  the  diflference,  or  an  earning  of 
$12.40  on  the  transaction. 

Now  if  you  will  imagine  A  and  B  to  be  one  and  the  same  person, 
you  will  see  that  what  a  borrower  actually  does  in  a  building  asso- 
ciation is  simply  to  pay  a  little  higher  rate  of  interest  on-  the  money 
he  borrows  in  consideration  for  obtaining  it  in  a  lump  sum  in  ad- 
vance, than  he  is  compelled  to  accept  on  money  he  has  to  loan,  or 
which  he  is  obliged  to  save  and  repay  to  the  association  in  install- 
ments. 

The  actual  cost  of  a  loan  from  any  building  association,  or  from 
any  other  institution  for  that  matter,  is  the  actual  rate  of  interest 
that  they  charge,  and  not  simply  the  difference  between  the  rate  you 
pay  them  and  what  they  pay  you  on  exchange  transactions. 

All  the  explanations  and  tables  that  ever  came  to  the  writer's 
attention  heretofore  have  assumed  that  the  borrower's  money  was  not 
worth  any  interest  to  him,  and  that  what  he  received  as  interest 
was  merely  a  gift  or  gratuity  from  the  association,  and  therefore 
should  apply  as  a  credit  against  what  interest  he  had  to  pay  the 
assbciation,  and  to  that  extent  would  reduce  the  cost  of  the  loan, 
when,  as  a  matter  of  fact,  and  justice  and  correct  interpretation'  of 
the  transactions,  the  difference  between  the  interest,  premium,  etc., 
paid  the  association  and  the  dividends,  rebates,  etc.,  allowed  the 
borrowers,  shows  the  gross  earnings  to  the  association,  and  not  the 
net  cost  of  the  loan.  It  also  shows  how  much  more  interest,  etc.,  a 
borrower  has  to  pay  for  a  loan  from  the  building  association  than  he 
can  obtain  on  his  own  money  when  dealing  with  them. 


[223] 


CHAPTER  XX. 

TABLE  No.  2.— REBATE  PERMANENT  PLAN. 

Same  as  Table  No.  1,  Except  the  Dues  Are  $1.00  Per  Share  or 

$2.00  Per  Week— $52.00  Every  Six  Months. 

Interest  $1.20  per  week,  $31.20  every  six  months. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Average  value  of  shares  for  6  months,  $26.00 ;  second  6  months. 
$78.00.  2j/^%  dividends  on  these  average  values  is  65c  and  $1.95 
respectively.  Rebate,  12c  each  week,  end  of  each  year;  $3.12  for  6 
months;    $6.24  for  year. 


(WO 

^1 


(mO  CD 


^•C  C 

H2  o 


31-0 


1st  lEndof  26  weeks 

$52  00 

65 

$31  20 

••   52   " 

104  00 

1  95 

$104  00 

$896  00 

31  20 

2d  

"   26   " 

52  00 

65 

28  08 

"   52   " 

104  00 

1  95 

104  00 

792  00 

28  08 

Sd  

"   26   " 

52  00 

65 

24  96 

"   52   " 

104  00 

1  95 

104  00 

688  00 

24  96 

4th  

"   26   " 

52  00 

65 

. 

21  84 

"   52   " 

104  00 

1  95 

104  00 

584  00 

21  84 

5th  

•'   26   " 

52  00 

65 

18  72 

"   52   " 

104  00 

1  95 

104  00 

480  00 

18  72 

6th  

"   26   " 

52  00 

65 

15  60 

"   52   " 

104  00 

1  95 

104  00 

376  00 

15  60 

7th  

"   26   " 

52  00 

65 

12  48 

"   52   " 

104  00 

1  95 

104  00 

272  00 

12  48 

8th  

"   26   " 

52  00 

65 

9  36 

"   52   " 

104  00 

1  95 

104  00 

168  00 

9  36 

9th  

"   26   " 

52  00 

65 

6  24 

"   52   " 

104  00 

1  95 

104  00 

64  00 

6  24 

lOth  .... 

"   21   " 

42  00 

42  00 

22  00 

2  52 

|23  40     I   $978  00 


I   $339  48 


Total  lenRth  of  time,  9  years  and  21  weeks,  or  489  weeks. 

Total  amount  paid  as  dues $  978  00 

Total  amount  of  dividends 23  40 

Total  amount  of  credits $1,001  40 

Less  amount  already  applied  on  mortgage 936  00 

$  65  40 

Less  amount  paid  during  21  weeks 42  00 

$  23  40 

Less  amount  transferred  from  dividends  to  pay  balance  due 22  00 

$  1  40 
The  company  now  pays  the  borrower  this  $1.40  and  returns  mortgage  duly 
cancelled  in  full  settlement. 
If  the  borrower  had  taken  a  straight  loan  on  the  basis  of  interest  charged 

in  the  above  table  it  would  have  cost  489  times  $1.20,  or $  586  80 

But  he  actually  paid  according  to  table 889  48 

This  leaves  amount  of  rebates  actually  credited $  247  32 

Current  dividends  credited 23  40 

Making  total  earned  on  money  he  saved  and  repaid  of $  270  72 

The  interest  he  actually  paid  on  loan  was $  339  48 

The  gross  earnings  on  his  savings  were 270  72 

Actual  net  earnings  of  the  building  association $  68  76 

[224] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

TABLE  No.  3.— COMPOUND  INTEREST  PERMANENT 

PLAN. 

Showing  the  Course  and  Results  of  a  Loan  of  $1,000.00. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Payments,  fl.OO  per  week.  Interest,  $1.20  per  week  continuously. 
Dividends,  5% — 2^%  semi-annually — on  accumulated  dues  com- 
pounded; in  other  words,  dividends  are  added  to  the  principal,  at 
the  end  of  each  six  months,  and  draw  dividends. 

Current  average  value  each  6  months  is  $13.00  plus  the  credits 
beginning  each  term.  As  the  current  payments  of  dues  are  $26.00' 
each  6  months,  and  average  value  only  $13.00,  there  is  always  $13.00 
more  to  be  added  at  end  of  each  term  to  make  the  total  credits  for 
beginning  the  next  term. 


•SI 

j= 

c 

o  S 

=  2:3 

•s« 

i 

•9 

M 

V 

«  c 

Qo 

Value  of  dues 
and  dividends 
beginning  of 
each  6  months 

<3S 

Total  average 
value  for 
dividends  curi 
6  months 

2%  dividends 
current  term  t 
be  added  to 
previous  credi 

lib 

5>1 

Total  value 
of  dues  and 
dividends  at  e: 
of  each  6  mon 

'4 
11 

1st  .. 

..$26  00 

$13  00 

=  $13  00  +  $  0  32  +$13  00 

=  $26  32  $31  20 

52  00 

$26 

32  + 

13  00 

=     39  32  + 

97  + 

13  00 

=  53 

29 

31  20 

2d  .. 

. .  78  00 

53 

29  + 

13  00 

=  66  29  + 

1  65  + 

13  00 

=  80 

94 

31  20 

104  00 

80 

94  4- 

13  00 

=  93  94  + 

2  34  + 

13  00 

=  109 

28 

31  20 

3d  .. 

..130  00 

109 

28  + 

13  00 

=  122 

28  + 

8  05  + 

18  00 

=  138 

33 

31  20 

156  00 

138 

33  -f 

13  00 

=  151 

33  + 

3  78  + 

13  00 

=  168 

11 

31  20 

4th  .. 

..182  00 

168 

11  + 

13  00 

=  181 

11  + 

4  52  + 

13  00 

=  198 

63 

81  20 

208  00 

198 

63  -f 

13  00 

=  211 

63  + 

5  29  + 

13  00 

=  229 

92 

31  20 

5th  .. 

..234  00 

229 

92  -- 

13  00 

=  242 

92  + 

6  07  + 

13  00 

=  261 

»9 

31  20 

260  00 

261 

99  -- 

13  00 

=  274 

99  + 

6  87  + 

13  00 

=  294 

86 

31  20 

6th  .. 

..286  00 

294 

86  + 

13  00 

=  307 

86  + 

7  69  + 

13  00 

=  828 

55 

81  20 

312  00 

328 

55  4- 

13  00 

=  341 

55  + 

8  54  + 

13  00 

=  863 

09 

31  ^0 

7th  .. 

..338  00 

363 

09  + 

13  00 

=  376 

09  + 

9  40  + 

13  00 

=  398 

49 

31  20 

364  00 

398 

49  + 

13  00 

=  411 

49  + 

10  28  + 

13  00 

=  434 

77 

81  20 

8th  .. 

..390  00 

434 

77  + 

13  00 

=  447 

77  + 

11  19  + 

13  00 

=  471 

96 

81  20 

416  00 

471 

96  + 

13  00 

=  484 

96  + 

12  12  + 

13  00 

=  510 

08 

31  20 

9th  .. 

..442  00 

510 

08  + 

13  00 

=  523 

08  + 

13  07  + 

13  00 

=  549 

15 

31  20 

468  00 

549 

15  + 

13  00 

=  562 

15  + 

14  05  + 

13  00 

=  589 

20 

81  ZO 

10th  .. 

..494  00 

589 

20  + 

13  00 

=  602 

20  + 

15  05  + 

13  00 

=  630 

25 

81  20 

520  00 

630  25  + 

13  00 

=  643 

25  + 

16  08  + 

13  00 

=  672 

33 

31  20 

11th  .. 

..546  00 

672 

35  + 

13  00 

=  685 

33  + 

17  13  + 

13  00 

=  715 

46 

31  20 

572  00 

715 

46  + 

13  00 

=  728 

46  + 

18  21  + 

13  00 

=  759 

67 

81  20 

12th  .. 

..598  00 

759  67  + 

13  00 

=  772 

67  + 

19  31  -- 

13  00 

=  804 

98 

31  20 

624  00 

804 

98  + 

13  00 

=  817 

98  + 

20  45  -- 

13  00 

=  851 

43 

31  20 

13th  .. 

..650  00 

851 

43  + 

13  00 

=  864 

43  + 

21  61  + 

13  00 

=  899 

04 

31  20 

676  00 

899  04  -f 

13  00 

=  912 

04  + 

22  80  + 

13  00 

=  947 

84 

31  ao 

14th  .. 

..702  00 
2  14 

947 

84  + 

13  00 

=  960 

84  + 

24  02  + 

13  00 

=  997 
2 

86 
14 

31  20 

704  14 

295  86 

$1,000  00  842  40 

704  14 

2»5  86 

$1,000  00 

$546  54 

[225] 


CHAPTER  XX. 


EXPLANATION  AND  REMARKS. 

Columns  with  plus  signs  between  them  are  added  together  on 
each  line  to  make  the  total  appearing  in  the  next  column  to  the  right. 

Totals  in  next  to  last  column  (dues  and  dividends  at  end  of  term) 
are  brought  over  into  third  column  (but  on  next  line  below)  for  dues 
and  dividends  at  beginning  of  term. 

Total  length  of  time  13^  years,  or  702  weeks. 

On  account  of  their  being  a  balance  of  so  small  an  amount  as 
$2.14  due  to  close  the  account  with  the  last  meeting  in  the  six 
months^  term  it  is,  for  obvious  reasons,  assumed  that  the  borrower 
just  paid  this  $2.14  with  the  last  payment  in  the  term,  and  notified 
the  secretary  that  his  credits,  including  the  last  six  months'  dividend, 
to  which  he  would  be  entitled  at  the  next  meeting,  would  cancel 
his  mortgage,  which  he  would  request  be  done,  at  the  next  or  .a 
subsequent  meeting.  This  saves  splitting  hairs  about  small  fractions 
of  interest  and  loss  of  dividends,  and  somewhat  simplifies  the 
calculations. 
It  will  be  observed  that  the  borrower  paid  according  to 

this  table,  dues  amounting  to $   704  14 

And  had  dividends  to  his  credit  of 295  86 

Total  to  balance  loan $1,000  00 

The  company  received  in  interest  a  total  of $   842  40 

The  company  allowed  and  credited  interest  amounting  to 2%  86 

The  company  received  more  than  they  allowed $   546  54 

The  remarkable  thing  in  connection  with  this  table  as  compared 
with  the  results  in  Table  No.  1  is  the  time  in  which  the  loan  was 
paid  off  as  compared  with  the  time  loan  has  to  run  in  Table  No.  1, 
considering  the  fact  that  the  weekly  dues  paid  were  the  same  in 
both  instances. 

There  are  several  reasons  for  this ;  one  was  the  fact  that  the 
dividends  were  allowed  on  the  accumulated  dues,  and  the  second  is 
that  they  were  compounded.  A  third  is,  though  a  logical  necessity 
of  compound  interest,  that  the  dividends  were  retained  JDy  the 
company  to  the  credit  of  the  borrower,  which  is  quite  a  different 
proposition  when  considering  the  time  a  loan  has  to  run. 

in  working  out  these  tables  the  writer  was  himself  surprised  at 
the  results,  for  he  has  been  under  the  impression  for  a  long  time 
that  the  rebate  plan  would  be  shorter  in  time  and  probably  less  ex- 
pensive, owing  to  the  fact  that  the  rebates  are  on  the  basis  of  the 
interest  rate  that  is  paid,  or  at  least  G%  in  place  of  5%,  as  are  the 
dividends. 

A  comparison  of  the  loan  under  Table  No.  3  with  loan  in  Table 
No.  1  at  the  same  period  of  time  for  both,  to  wit:  13J^  years  (the 
closing  period  for  Table  No.  3)  will  show  some  interesting  and  prob- 
ably, to  most  readers,  some  new  facts  relating  to  the  operations  of 
compound  interest  as  compared  with  simple  interest,  rebated  even 
at  6%.    See  Remarks  under  Table  No.  4. 

[226] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

TABLE  No.  4. 
Comparing  Rebate  with  Compound  Interest  Permanent  Plans. 

Prepared  by  W.  H,  Jones.  Public  Accountant,  Cincinnati,  O. 

Table  No.  1,  with  its  dividends  and  6%  rebates,  down  to  the 
thirteenth  and  a  half  year,  which  is  the  full  period  of  Table  No.  3 
at  5%  compound  dividends,  are  h€re  carefully  and  in  detail  compared. 


O  B.* 


.•£•3 


«>^ 


•s  ft  o 

OUhU 


Q.S'S 


End  1st  year . . 

"  2d  year. . . 

"  3d  year. .. 

"  4th  year. . 

"  5th  year. . . 

"  6th  year. . . 

"  7th  year. . . 

"  8th  year. . . 

"  »th  year. . . 

"  10th  year. . 

"  11th  year.. 

"  12th  year.. 

"  13th  year.. 

"  13 J4    year. 


$     1  29 

3  99 

6  83 

9  81 

12  94 

16  28 

19  68 

28  81 

27   12 

81   13 

35  34 

89  76 

44  41 

24   02 


Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 


$  1  29 

8  12 
1  29 
6  24 
1  29 

9  36 
1  29 

12  48 

1  29 
15  60 

1  29 
18  72 

1  29 
21   84 

1  29 
24  96 

1  29 
28  08 

1  29 
81  20 

1  29 
84  82 

1  29 
87  44 

1  29 

20  28 

32 


I  1  20 
4  41 
7  58 
10  66 
13  77 
16  99 
20  01 
23  13 
26  25 
29  37 
82  49 
35  61 
88  78 
20  60 


|0  42 
70 
84 
88 
66 
8S 


$  0  18 
87 

1  76 

I 

2  85   I 

I 

4  15   j 

5  68  ' 

3  42 


$295  86 

280  78 

$  15  18 


$280  78 


$18  91 

3  78 

$15  18 


$3  78 


[227] 


CHAPTER  XX. 

The  first  column  in  above  Table  No.  4  shows  the  full  year  periods. 

The  second  column  shows  compound  dividend  taken  from  2^% 
dividend  column  in  Table  No.  3,  where  they  are  shown  in  amounts 
for  each  six  months,  but  are  combined  for  the  year  in  above  table 
because  rebates  are  only  made  at  end  of  the  year. 

The  third  column  shows  dividends  and  rebates  taken  from  Table 
No.  1.  The  dividends  are  combined  for  the  year  thus,  ^2  -{-  97  =  1.29. 
The  rebates  are  obtained  as  follows  from  Table  No.  1 : 

The  full  interest  for  first  year  is  twice  $31.20  or $62  40 

Th€  full  rebate  is  twice  $1.56  or  $3.12 3  12 

This  amount  equals  2  X  $29.64,  the  interest  for  6  months  for 

second  year  or $59  28 

The  rebate  the  next  year  is  $3.12  from  $59.28,  but  this  is  equal  to 
twice  $3.12  from  $62.40,  a  full  year's  interest,  so  the  rebates  of 
interest  for  the  second  year  amounts  to  $3.12  and  for  the  third  year 
$6.24  and  the  fourth  year  $9.36  and  $3.12  added  for  each  succeed- 
ing year.    Notice  that  they  are  only  taken  down  to  the  13j^-year  term. 

The  dividends  and  rebates  are  then  added  and  extended  into  totals 
for  each  year  in  column  to  the  right. 

The  difference  between  these  totals  and  the  totals  in  the  second 
column  show  the  difference  between  amounts  credited  to  borrower 
under  the  separate  plans. 

The  first  year  the  dividend  credits  are  the  same  in  both.  The 
second  year  the  difference  betweent  $4.41  rebate  plan  and  $3.99 
compound  interest  plan  is  42  cents  in  favor  of  rebate  plan,  and  then 
follows  other  differences  as  shown  in  last  column. 

In  the  eighth  year  it  changes  to  18  cents  difference  in  favor  of 
compound  interest  plan  as  shown  in  second  last  column,  and  continues 
on  the  increase  until  close  of  terra.  You  can  see  that  this  is  verified 
by  taking  the  difference  between  the  totals  of  compound  dividends  of 
$295.86  and  totals  of  rebate  plan  $280.73,  and  also  difference  between 
the  columns  of  difference  of  $18.91  and  $3.78. 

This  shows  that  the  compound  interest  plan  overtook  and  began 
to  run  ahead  of  the  rebate  plan  in  the  eighth  year. 

The  difference  in  the  two  tables,  Nos.  1  and  3,  also  show  that 
while  the  borrower  in  Table  No.  3,  under  the  compound  interest 
plan,  was  prepared  to  cancel  his  loan  in  the  fourteenth  year  (13^/^ 
years)  simply  because  he  allowed  his  dividends  to  accumulate  as  a 
credit,  the  borrower  in  No.  1  had  paid  exactly  the  same  amount  of 

[228] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

dues  ($702.00)  at  the  end  of  this  period  under  the  other  plan^  but 
would  have  to  continue  his  payments  for  over  five  years  longer,  ac- 
cording to  No.  1  Table. 

The  statement  of  each  at  this  point  are,  according  to  the  tables, 
as  follows : 

Table  No.  3— Dues  paid  $   704  14 

Dividends    credited 295  86 

Total    $1,000  00 

Table  No.l— At  13 J/^  years  dues  paid  13X52-f26=$702  00 
Dividends  to  credit 17  09 

Total    credits $719  09 

Amount  of  mortgage $1,000  00 

Less  credits  719  09 

Amount  still  due $  280  91 

Requiring  according  to  the  Table  No.  1  over  5j4  years  longer. 
They  had  both  paid  to  the  same  date  as  follows : 

Borrower,  Table  No.  1 — Paid  dues $   702  00 

Paid    interest $   578  76 

Less  dividends  credited       17  09         561  67 

Total  paid  13J^  years $1,263  67 

Borrower,  Table  No.  3 — Paid    dues $  704  14 

Paid    interest 842  40 

Total    $1,546  54 

Less  dividend  credits. .      295  86 


Net  total  paid  13^  years,  $1,250  68    $1,250  68 


An  am't  less  than  rebate  borrower. $     12  99 
While  the  compound  plan  borrower  is  ready  to  cancel'  his  loan  at 

this  point,  being  $12.99  ahead  of  the  other  rebate  borrower,  the  latter 

has  still  $280.91  to  pay  with  additional  interest  during  the  five  years 

or  more. 

This    certainly   ought   to   be    convincing   as    to    the    desirability, 

economy  and   superiority  of  the   compound   interest  plan  over  the 

rebate  plan. 

[229] 


CHAPTER  XX. 
TABLE  No.  5— COMPOUND  INTEREST  PERMANENT 

PLAN. 
Showing  Course  and  Results  of  a  Loan  of  $1,000.00. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 
Payments,  $2.00  per  week  as  dues,  interest,  $1.20  per  week  con- 
tinuously.   Dividends  5%=254%  semi-annual — on  accumulated  dues 
compounded.     Current ,  average  value  each  6  months  is  $26.00  plus 
credits  beginning  term. 


(0 

rt 
> 

Q  o 

Value  of  dues 
and  dividends 
beginning  of 
each  6  months 

Average  value 
current  6  months 
to  be  added 

Total  average 
value  for 
dividends  current 
6  months 

2J4%  dividends 
current  term  to 
be  added  to 
previous  credits 

o 
111 

Total  value 
of  dues  and 
dividends  at  end 
of  each  6  months 

1% 

n 

1st  .. 

..$52  00 

$26  00 

=  $26 

00  4-  $  0  65  4- 

26  00 

=  $52  65  $31  20 

104  00 

$52  65  4-  26  00 

=:  78 

65  4- 

1  95  4-  26  00 

=  106  60 

31  20 

2d  .. 

..156  00 

106  60  -1-  26  00 

—  132 

60  4- 

3  30  4- 

26  00 

=  161  90 

31  20 

208  00 

161  90  4-  26  00 

=  187 

90  4- 

4  694- 

26  00 

=  218  59 

31  20 

8d  .. 

..260  00 

218  59--  26  00 

=  244 

59  -1- 

6  10  4- 

26  00 

=  276  69 

31  20 

312  00 

276  69  --  26  00 

=  302 

69  4- 

7  55  4- 

26  00 

=  336  24 

31  20 

4th  .. 

..364  00 

336  24  -f-  26  00 

=  362 

24  4- 

9  05  4- 

26  00 

=  397  29 

31  20 

416  00 

397  29  -1-  26  00 

=  423 

29  4- 

10  57  -- 

26  00 

=  459  86 

31  20 

5th  .. 

..468  00 

459  86  -}-  26  00 

=  485 

86  4- 

12  12  -- 

26  00 

=  523  98 

31  20 

520  00 

523  98  -1-  26  00 

=  549 

98  4- 

13  75  4- 

26  00 

=  589  73 

31  20 

6th  .. 

..572  00 

589  73  4-  26  00 

=  615 

73  4- 

15  37  4- 

26  00 

=  657  10 

31  20 

624  00 

657  10  4-  26  00 

=  683 

10  4- 

17  07  4- 

26  00 

=  726  17 

31  20 

7th  .. 

..676  00 

726  17  4-  26  00 

=  752 

17  4- 

18  80  4- 

26  00 

=  796  97 

31  20 

728  00 

796  97  4-  26  00 

=  822 

97  4- 

20  55  4- 

26  00 

=  869  52 

31  20 

8th  .. 

..780  00 

869  52  --  26  00 

=  895 

52  4- 

22  37  4- 

26  00 

=  943  89 

31  20 

832  00 

943  89  --  26  00 

=  969 

89  4- 

24  22  4- 

26  00 

=  1020  11 

31  20 

$832  00 

$188  11 

$1020  11 

499  20 
188  11 

311  09 

EXPLANATION  AND  REMARKS. 

It  will  be  observed  that  this  loan  was  allowed  to  run  for  the  full 
eight  years,  and  credits  amounted  to  $20.11  more  than  face  of  loan. 

It  was  necessary  to  do  this  in  order  to  obtain  the  last  six  months' 
dividend  of  $24.22,  which  really  produced  the  overpayment,  or  excess 
credit. 

The  borrower  oaid  in  dues  as  above $    832  00 

Dividends  credited   188  11 

Total  credits • $1,020  11 

Less  amount  of  mortgage 1,000  00 

$  20  11 
Company  will  now  return  $20.11  and  the  cancelled  mortgage. 

The  company  received  in  interest $  499  20 

The  company  allowed  dividends 188  11 

The  company  received  more  than  allowed $  311  09 

The  borrower  paid  in  dues $    832  00 

The  borrower  paid  in  interest 499  20 


$1,143 

Actual  amount  paid  in  dues 832  00 

Net  interest  earnings  of  building  association $    311  09 

[230] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


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3 
►-t 

CHAPTER  XX. 


;  EXPLANATION  AND  REMARKS  TABLE  No.  6. 
! 

I  This  is  a  perpetual  calendar  for  dates  by  the  week,  such  as  every 

!  building  association  needs  for  quick  reference  during  each  current 

I  six  months'  term.    The  date  of  your  first  meeting  in  January,  at  top 

;  of  calendar,  will  indicate  your  column  of  dates  for  that  term.     On 

j  account  of  leap  year  it  becomes  necessary  to  have  two  sections  of 
dates   from  January  to  July.     The   extra  section   is  placed   at  the 

!  extreme  left,  because  it  will  only  be  used  once  in  about  four  years. 

I  The  double  columns  for  consecutive  number  of  weeks — from  1  to 

j  26  each  way — are  located  at  several  different  places  for  convenience. 

I  To  ascertain  the  amount  of  dues  paid  from  January  2  (not  leap  year, 

!  and   this   will   apply   to   all   subsequent  reference,   unless   otherwise 

•  mentioned,)  to  May  1,  you  locate  the  date,  May  1,  and  then  follow 
j  this  line  to  the  right  to  the  first  column  of  weeks  and  you  find  18. 
I  Now,  if  dues  are  paid  at  50c  per  week,  the  amount  would,  of  course, 
!  be  $9.00;    if  at  $L00  per  week,  it  would  be  $18.00. 

r  To  ascertain  the  amount  of  dues  paid  and  the  average  value  of 

;  same  from  any  date  during  the  term  to  the  end  of  the  term   (and 

'  this  is  the  real  and  valuable  use  to  be  made  of  the  table)  you  first 

;  locate  the  date,  say  March  1,  then   follow  this  line  to  the  second 

;  column   of   weeks   and  you   get   18;     in   the   next   column   you   see 

\  amount  of  dues  paid  at  50c  per  week — $9.00 — and  the  average  value 

i  of  the  share  in  the  next  column  of  $3.29.  If  there  is  but  one  share, 

!  then  you  would  place  $3.00  in  your  dividend  book  as  the  average 

value  on  which  to  allow  dividends  for  that  term.    If  more  than  one 

[  share,  multiply  $3.29  by  total  number  of  shares  for  average  value, 

omitting  the  cents  in  the  final  result.    If  the  dues  paid  are  $1.00  per 

■  share,  then  you  use  the  columns  under  '1  share  at  $1.00"  in  the  same 

•  manner,  to  wit :   18  weeks  paid==$18.00 ;   average  value,  1  share,  $6.58, 

•  multiply  by  total  shares  for  total  average  value.  When  you  are  in 
j  the  second  six  months'  term  use  the  calendar  to  correspond  and 
j  follow  lines  to  the  left. 

!  There  has  been  considerable  confusion  and  discussion  in  the  past 

'•  in  regard  to  calculations  for  ascertaining  average  value  of  shares, 

•  which  determines  the  amount  they  are  entitled  to  dividends  on  and 
;  also  the  time  deposits  are  entitled  to  interest. 

I  The  matter  can  be  cleared  up  once   for  all,  if  the  first  weekly 

i  meeting  in  every  term  is  made  the  pivotal  point  of  starting  and  the 

j  closing  of  the  time,  the  first  meeting  in  the  next  term. 

'  A  full  six-month  period  must  be  from  the  first  meeting  in  one 

':  term  to  the  first  meeting  in  the  next  term.     It  is  necessary  to  have 

!  full  six  months'  time  for  all  dividend  and  interest  calculations  made 
for  the  full  term.     Take  for  instance  the  term  from  January  3  to 

!  June  27  (see  Table  No.  6).    This  is  26  meeting  dates,  but  the  time 

•  is  really  only  25  weeks. 

;  Time  never  runs  backward  for  what  is  to  be,  but  always  forward. 

!  The  actual  time  in  weeks,  beginning  with  any  date,  say  January 

I  24,  or  the  fourth  meeting  in  the  term,  down  to  the  week  to  which  the 

»  calculation  is  to  be  made,  say  June  6,  or  the  twenty-third  meeting 
in  the  term,  will  always  be  the  difference  between  the  number  of 

i  [232] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


the  meetine:  at  the  time  calculation  is  to  be  made,  and  number  of 
meeting  at  date  of  starting,  or  as  in  this  case,  23 — 4=19  weeks. 

But  suppose  now  that  you  wanted  to  know  how  many  weeks  a 
dues  payer  had  paid,  beginning  on  the  fourth  meeting  and  paying 
up  to  and  including  the  twenty-third  meeting,  the  number  would  now 
be  23 — 3=20  weeks  dues  paid.  The  reason  for  this  is  that  both  the 
first  and  the  last  meeting  must  now  be  included. 

The  first  case  is  a  question  of  lapsed  time,  while  the  second  is  a 
question  of  number  of  meetings.  Get  this  diflFerence  fixed  in  your 
mind. 

This  point  may  possibly  be  made  a  little  clearer  by  narrowing 
it  down  to  the  first  and  second  week.  If  a  depositor  put  in  $50.00  the 
first  week  and  drew  it  out  the  second  week,  how  many  weeks  interest 
would  he  be  entitled  to?  Why,  one  week,  of  course.  If  a  dues  payer 
paid  for  two  weeks,  how  many  weeks'  dues  should  he  have  to  his 
credit?     Why,  two,  of  course. 

Every  secretary  should  consider  the  time  the  old  term  has  to 
run — up  to  the  end  of  the  last  week,  or  to  the  first  week  in  the 
new  term. 

Why?  Because  the  secretary  cannot  declare  dividends  until  after 
the  business  is  closed  for  the  twenty-sixth  or  last  meeting  in  the  term 
and  has  ascertained  the  full  earnings  and  made  the  proper  distribu- 
tions and  balanced  and  closed  all  the  loss  and  gain  accounts. 

He  could  not  pay  a  member  any  part  of  the  new  dividend  on 
the  last  meeting  in  a  term  for  the  reason  that  the  member  has  not 
yet  been  credited  with  his  share  of  the  new  dividend.  In  fact  the 
dividend  fund  has  not  yet  been  credited  with  any  part  of  this  new 
dividend.  This  is  done  only  after  the  closing  meeting  of  the  term. 
Hence,  if  a  member  cannot  draw  any  of  his  new  dividend  until  the 
first  meeting  of  the  new  term  (it  is  seldom  that  they  can  get  it  even 
then),  his  dividend  should  be  calculated  up  to  that  time. 

Take  the  case  of  a  depositor,  for  instance : 

One  who  has  made  a  deposit  of  $100.00  on  March  8,  the  tenth 
meeting  in  the  term  (see  Table  No.  6)  and  allowed  it  to  remain  over 
to  the  next  term.  His  interest  as  all  other  depositors'  interest,  should 
be  calculated  up  to  the  first  meeting  in  the  next  term,  for  remember 
that  this  is  now  to  be  the  pivotal  point  of  starting  all  calculations  for 
interest  on  his  deposit  in  the  next  term.  The  first  meeting  in  the 
next  term  being  really  the  twenty-seventh  meeting,  the  time  that 
should  be  allowed  this  depositor  would  be  27 — 10=17  weeks,  and  the 
interest  on  $100.00  for  17  weeks  per  Table  No.  7  would  be  $1.30 
at  4  per  cent. 

This  is  how  all  interest  on  deposits  should  be  calculated  at  the  end 
of  the  year  to  ascertain  the  interest  accrued  and  unpaid  and  to  be 
credited. 

Suppose  now  that  this  depositor  wished  to  draw  out  his  money 
and  interest  on  the  first  meeting  in  the  new  term.  All  he  would 
receive  would  be  the  amount  to  his  credit,  and  no  additional  interest, 
would  be  allowed  for  the  time  of  1  week  between  the  two  terms.  He 
would  not  be  entitled  to  any. 

[233] 


CHAPTER  XX. 


Suppose  now  that  instead  of  drawing  it  all  out  on  the  first  meet- 
ing he  had  simply  drawn  his  interest,  and  later,  say  on  the  tenth 
meeting  in  the  new  term,  he  wished  to  draw  $50.00.  The  difference 
between  the  tenth  and  the  first  would  be  9  weeks,  on  which  he  would 
be  entitled  to  interest,  amounting,  at  4%,  per  Table  No,  7,  to  one- 
half  of  69c,  or  34c  on  $50.00.  Where  a  partial  withdrawal  of  a 
deposit  is  made,  interest  is  calculated  on  the  amount  withdrawn  only. 
The  remainder  will  be  credited  with  interest  at  the  end  of  the  term, 
or  at  any  time  previous  that  it  may  be  withdrawn.  We  repeat 
that  you  must  remember  the  pivotal  point  of  starting  all  interest 
calculations,  is  to  be  the  first  meeting  in  each  term  and  ending 
with  the  first  meeting  of  the  next  term,  or  on  date  of  withdrawal, 
if  drawn  previous  to  the  full  term. 

If  dividend  and  interest  calculations  are  invariably  made  upon  this 
basis  there  can  never  be  any  discussion  or  disputes  as  to  its  accuracy. 

This,  in  the  opinion  of  the  writer,  determines  the  correct  value  of 
the  tables  of  six  months'  averages,  to  be  according  to  those  prepared 
and  given  in  this  work,  under  Permanent  Plan,  System  II,  and  used 
in  Table  No.  6. 

Your  attention  is  called  to  the  dates  of  December  30  and  31. 
Whenever  a  weekly  meeting  falls  on  either  of  these  dates  you  are 
likely  to  have  27  meetings  in  the  last  six  months  of  the  year.  This  will 
recur  every  seven  years.  It  is  occurring  every  year  to  one  or  more 
associations.  Most  associations  keep  the  fiscal  year  concurrent  with 
the  calendar.  If  the  term  ends  with  the  calendar,  or  if  the  twenty- 
sixth  meeting  is  the  last  one  held  in  December,  they  always  have  it 
remain  so,  even  when  the  twenty-seventh  meeting  occurs.  This  they 
take  care  of  by  crowding  it  in  with  the  other  26  meetings,  usually, 
by  making  the  entries  for  this  one  meeting  all  on  one  folio  of  the 
Dues  Book,  where  the  rulings  do  not  provide  for  fourteen  meetings 
every  quarter. 

If  the  fiscal  year  ends  with  the  last,  or  any  other  meeting,  in  any 
other  month  and  is  retained,  then  it  must  be  treated  in  the  above 
manner  when  this  twenty-seventh  meeting  recurs.  Some  associa- 
tions allow  this  twenty-seventh  meeting  to  change  their  fiscal  year 
every  time  it  recurs.  This  defers  the  ending  of  their  fiscal  year  one 
week  later  every  seven  years. 

It  is  customary,  when  this  occurs,  to  treat  it,  so  far  as  dividends 
and  interest  on  deposits  are  concerned,  as  a  part  of  the  six  months, 
instead  of  six  months  and  one  week. 

When  the  association  allows  it  to  change  its  fiscal  year,  the  ques- 
tion of  dividends  and  interest  on  deposits  needs  no  adjustment. 


[234] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


TABLE  No.  7. 
Weekly  Interest  On  a  Deposit  of  $100.00  at  4%,  4^%  and  5%. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 


*% 

Weeks 

mx 

Weeks 

s% 

77,3 

1 

8"/., 

1 

97.3 

IS'/.s 

2 

167.3 

2 

197,, 

237,, 

3 

25"/3, 

3 

28"/.. 

*>'V,3 

4 

347.3 

4 

387,3 

387,n 

5 

437., 

5 

487,3 

<6V,3 

6 

51"A3 

6 

577.. 

63»/.3 

7 

60'7., 

7 

677.3 

"7,3 

8 

697.3 

8 

76'7,3 

«9^/,3 

9 

""/.« 

9 

867.3 

76"/.3 

10 

867.3 

10 

967.3 

8*7,3 

11 

9573. 

11 

lOS'V.s 

927,3 

12 

1«3"/.. 

12 

1157.. 

100 

13 

1127, 

13 

'      125 

1077,3 

14 

1217,3 

14 

1347.3 

1157.3 

15 

129"/,, 

15 

1447,, 

1237.3 

16 

1387.: 

16 

153"/,3 

130'V,3 

17 

14773, 

17 

1637,3 

1387,3 

18 

155-7,3 

18 

1737.3 

i«7.. 

19 

164»/.c 

19 

1827,3 

153"/.. 

20 

1737.3 

20 

1927,3 

1617.3 

21 

181"/30 

21 

201"/.3 

1697.3 

22 

1907.3 

22 

2117.3 

"6'7.3 

23 

19973. 

23 

2217,3 

1847.3 

24 

2077.3 

24 

230'7„ 

1927.3 

25 

21673, 

25 

24«»/., 

200 

26 

225 

26 

250 

Interest  on  $  10.00  would  be  \/io  above  amounts. 


20.00 

30.00 

40.00 

200.00 

300.00 

400.00 


2/         «  « 

/» 

double  above  amounts. 

3  times      " 

4  times      "  " 

[235] 


CHAPTER  XX. 

Table  No.  7  is  very  valuable  for  quickly  and  reliably  arriving 
at  the  interest  on  deposits  withdrawn  during  the  current  term  at 
rates  of  either  4%,  45^%  or  5%. 

There  are  three  conditions  of  time  that  deposits  run  that  it  is 
necessary  for  a  secretary  to  determine. 

1st.  To  ascertain  the  time  on  a  deposit  carried  over  from  a 
previous  term  and  withdrawn  during  the  current  term. 

2d.  To  ascertain  time  a  deposit  has  run  that  was  made  in  early 
part  of  term  and  withdrawn  later  during  the  same  term. 

3d.  To  ascertain  time  a  deposit  has  run  that  was  made  during 
the  term  and  allowed  to  run  over  into  the  next  term. 

Suppose  in  the  first  case  $50.00  is  to  be  withdrawn  with  4% 
interest  on  April  20th,  by  referring  to  calendar  Table  No.  6  you  will 
ascertain  that  April  20th  is  16  weeks  from  the  first  week  of  the 
year  (and  as  all  interest  calculations  have  been  made  up  to  the  first 
week  as  explained  in  remarks  under  Table  No.  6)  the  number  of 
weeks  interest  to  which  he  would  be  entitled  would  be  16 — 1=15  weeks. 
According  to  above  table  15  weeks  interest  at  4%  is  $1.15  on  $100 
and  one-half  this  amount  on  $50.00  or  57  cents. 

The  interest  previously  credited  at  the  end  of  the  term  on  this 
deposit  may  have  been  withdrawn,  but  if  not  it  could  be  withdrawn 
at  this  time  in  addition. 

Suppose,  in  the  second  case,  a  deposit  of  $50.00  is  made  on 
March  2d,  or  the  ninth  week,  and  is  to  be  withdrawn  May  25th,  the 
twenty-first  week.  The  elapsed  time  will  be  21 — 9=12  weeks.  Ac- 
cording to  the  table,  interest  for  twelve  weeks  on  $100.00  at  4%  is 
92  cents  and  on  $50.00  it  will  be  one-half  as  much  or  46  cents. 

Suppose,  in  the  third  case,  a  deposit  of  $100.00  is  made  on 
March  16th.  or  the  eleventh  week  from  the  beginning  of  the  term, 
as  shown  in  weeks'  column,  the  elapsed  time  will  be  up  to  the  twenty- 
seventh  or  first  meeting  in  next  term  and  27 — lli=16  weeks.  (See 
explanations  under  Table  No.  6.)  The  interest  for  16  weeks,  accord- 
ing to  table,  will  be  $1.23. 

This  is  a  case  where  the  second  column  of  weeks  comes  in  handy, 
as  it  really  counts  the  lapsed  weeks  up  the  column  from  the  twenty- 
seventh  week,  and  always  gives  the  exact  number  of  weeks  opposite 
the  dates  of  starting  deposits  during  the  term,  to  wit :  opposite  date 
of  starting,  March  16th,  in  the  second  column  of  weeks  will  be  found 
sixteen,  which  is  the  correct  number  of  weeks  reached  at  once. 

This  is  important  because  it  is  the  greatest  use  that  a  secretary 
has  to  make  of  the  table  when  making  his  calculations  on  deposits, 

[236] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

in  order  to  ascertain  amount  of  interest  accrued  and  unpaid  at  end 
of  each  term. 

It  is  important  to  bear  in  mind  the  two  methods  of  obtaining  the 
lapsed  time.  In  the  two  former  cases  they  are  alike  as  the  first 
column  of  weeks  is  used,  and  in  the  last  one  it  is  different  as  the 
second  column  is  used. 

When  deposits  are  received  at  different  times  during  the  term 
from  the  same  party,  it  will  be  necessary  to  make  separate  calcula- 
tions on  each  amount  at  the  end  of  the  term. 

Any  secretary  who  has  considerable  of  this  to  do,  at  the  end  of 
each  year,  will  find  it  to  be  of  great  advantage  to  make  a  slip  with 
the  weekly  dates  for  the  current  term  of  6  months  running  from 
top  downward  and  with  the  numbers  running  up  from  1  to  26  and 
then  place  the  interest  rate,  4%,  4^%  or  5%,  whichever  he  uses,  at 
the  side  of  the  number,  just  reversing  the  way  it  runs  in  the  table. 
In  this  way,  as  soon  as  you  have  ascertained  the  correct  time  in 
weeks  on  the  different  amounts  of  deposit,  you  will  have  the  interest 
rate  per  $100.00  right  before  you. 


237 


CHAPTER  XX. 


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$  62.40  $  62.401$  62.40  $  31.20 

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$624.00 

$376.00 
12th  yr. 

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$572.00 
$428.00 

11th  yr. 

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$416.00 
$584.00 

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$364.00 
$636.00 

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1 

REBATE  AND  COMPOUND  INTEREST  TABLES. 

Table  No.  8  shows  in  a  most  graphic  and  comprehensive  way 
the  relations  of  a  borrower  to  a  building  association,  and  the  exact 
financial  condition  of  each  from  year  to  year.  The  triangle,  A,  D, 
C,  represents  the  borrower,  and  in  each  trapezoid,  X,  Y,  Z,  are  shown 
the  amount  of  dues  he  has  paid  to  end  of  each  year:  $52.00  for  the 
first;  $104.00  to  the  second,  etc.  The  triangle,  A,  B,  C,  represents 
the  building  association  having  made  a  loan  of  $1,000.00,  and  how 
much  less  the  loan  becomes  at  the  end  of  each  year,  as  shown  in 
the  trapezoids,  L,  M,  N,  being  $948.00  at  the  end  of  the  first  year; 
$806.00  end  of  second,  etc. 

It  will  be  observed  that  the  full  amount  of  $1,000.00  is  involved 
continuously  throughout  the  period  shown,  but  is  shifted  each  year 
in  its  relations  as  to  how  much  of  the  $1,000.00  is  still  owing  the 
building  association  and  how  much  of  the  $1,000.00  has  been  credited 
to  the  borrower.  The  relations  they  bear  at  the  end  of  the  first 
year  are,  $52.00  to  the  credit  of  the  borrower  and  $948.00  still  owing 
the  building  association;  the  second  year  the  relation  is  changed 
to  $104.00  to  $896.00,  etc. 

Another  point  to  observe  is  that  this  diagram  shows  it 
started  with  a  loan  of  $1,000.00,  and  it  is  to  be  presumed  and  assumed 
that  the  borrower  obtained  this  loan  for  the  purpose  of  investing  in 
a  home,  or  keeping  it  invested  in  some  other  way,  for  it  shows  that 
at  the  end  of  the  period  the  building  association  has  received  all  of 
its  money,  or  $1,000.00,  and  the  borrower  presumably  has  his  $1,000.00 
still  invested  (if  he  did  not  lose  it  in  some  poor  investment).  Any- 
how, the  first  $1,000.00  has  now  been  the  means  of  enabling  the 
borrower  to  save  a  second  $1,000.00. 

The  first  two  horizontal  lines  of  spaces  at  the  top  shows  the 
dividends  and  rebates  allowed  the  borrower,  and  the  last  horizontal 
line  of  spaces  at  the  bottom  shows"  the  interest  paid  to  the  building 
association  under  the  same  rebate  plan.  It  will  be  observed  that 
the  interest  paid  the  first  year  to  the  building  association  under  this 
plan  is  $62.40,  and  that  the  second  year  the  borrower  gets  a  rebate 
of  $3.12  and  the  building  association  only  $59.28,  the  two  amounts, 
$3.12 -f- $59.28  =  $62.40,  which  is  same  amount  of  interest  involved 
as  the  first  year.  The  same  amount  is  involved  every  year,  only  it 
increases  as  a  credit  to  the  borrower  and  decreases  in  amount  paid 
to  the  building  association  in  proportion  as  the  credits  of  the 
borrower  increases  and  his  indebtedness  decreases,  as  shown  in  the 
corresponding  trapezoids  for  each  year. 

This  rebate  plan  is  fully  illustrated  and  described  in  Table  No.  1. 

[239] 


CHAPTER  XX. 

The  third  horizontal  line  of  figures  at  the  top  and  the  first  line 
at  the  bottom  show  the  compound  interest  relations  of  borrower  and 
building  association,  more  fully  illustrated  and  described  in 
Table  No.  3.  The  diagram  is  not  extended  for  the  full  time  of  the 
rebate  plan,  but  only  far  enough  to  make  comparisons  with  Table  No. 
3,  as  more  fully  described  under  Table  No.  4. 

COMPARISONS  OF  EARNINGS. 

In  comparing  the  earnings  of  the  company  in  Table  No.  3  in  this 
instance,  to  wit,  $546.54,  with  the  earnings,  to  wit,  $106.90,  as  shown 
in  Table  No.  1,  one  cannot  but  wonder,  at  first  thought,  why  the 
earnings  are  so  much  larger,  apparently,  in  the  one  case  than  in 
the  other. 

On  reflection  you  will  note  several  reasons  for  this. 

1st.  All  that  a  building  association  does  in  transacting  its  busi- 
ness is  to  act  as  a  sort  of  clearing  house  for  its  members,  and  all 
that  it  can  ever  expect  or  hope  to  make  as  a  profit  is  the  difference 
between  the  rate  of  interest  it  charges  on  its  loans  and  the  rate  of 
dividends  it  pays  its  members  who  furnish  the  money.  In  both  cases 
above  the  amounts  are  gross  earnings,  and  not  net  profits.  This 
was  illustrated  by  the  supposed  case  of  the  association,  or  company, 
receiving  $1,000.00  from  A  and  loaning  it  to  B,  as  noted  in  the 
remarks  under  Table  No.  1. 

2d.  In  making  comparisons  of  any  transactions  between  the 
company  and  borrowers  the  element  of  time  the  loan  has  run  must 
always  be  taken  into  consideration  to  ascertain  gross  earnings. 

For  instance,  the  first  year  that  the  company  makes  a  loan  to  B, 
a  borrower,  he  is  presumed  to  begin  paying  in  installments,  say,  of 
$1.00  per  week,  and  at  the  end  of  the  year  he  will  have  paid  $52.00. 
The  company  this  year  will  receive  $62.40  as  interest  on  a  loan  to 
him  of  $1,000.00,  while  he  will  receive  interest  only  on  $52.00,  or  an 
average  of  $1.29'  on  the  basis  of  a  5i%  dividend. 

Ten  years  later,  if  payments  are  kept  up,  the  amount  still  owing 
the  company  will  be  reduced  to  less  than  one-half  and  the  interest 
will  be  approximately  the  same  as  the  dividends.  And  at  a  still  later 
period,  if  payments  are  kept  up,  the  interest  due  the  company  will 
be  practically  nil  as  compared  with  the  dividends  on  the  dues  paid 
by  this  borrower. 

When  the  building  association  first  makes  this  loan,  per  Table 
No.  8,  it  obtains  the  money  from  the  shareholders,  to  whom  it 
agrees  to  pay  dividends  thereon. 

[240] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

Let  us  assume  it  to  be  a  syndicate  of  thirteen  members,  for  the 
sake  of  the  argument,  from  whom  the  $1,000.00  is  obtained.  The 
loan  is  made  in  the  usual  manner,  and  all  goes  well  to  the  end  of 
the  year. 

Now  let  us  see  if  we  cannot  ascertain  the  net  profits  to  the 
building  association  for  this  year,  and  also  subsequent  years,  going 
as  far  as  the  third  year  to  show  some  in  which  rebate  is  allowed. 
Subsequent  years  would  show  same  results  under  same  treatment, 
assuming  the  dividend  at  5%  and  interest  charges  $1.20  per  week 
for  the  first  year,  and  for  the  second  and  subsequent  years,  dividends 
5%,  rebate  6%  and  interest  charges  $1.20  per  week.. 
This  should  figure  out  for  the  first  year  exactly  to  the  dif- 
ference between  gross  interest  charge $62  40 

and  5%  dividends 50  00 

or  a  total  net  earning  of $12  40 

The  second  year  the  clearing  house  or  building  association 
should  show  a  net  earning  as  follows:  (See  details  on  following 
page.) 

Gross  interest    $62  40 

Less  6%  rebate  to  borrower $  3  12 

Less  b%  dividends  to  borrower  first  6  months 32 

Less  5%  dividends  to  borrower  second  6  months 97 

Less  5%  dividends  to  syndicate  first  6  months 23  38 

Less  5%  dividends  to  syndicate  second  6  months 22  73 

Total  allowances  $50  52    $50  52 

Or  a  total  net  earning  second  year  of $11  88 

The  original  syndicate  now  had  returned  to  their  clearing  house 
during  the  first  6  months,  $26.00,  with  an  average  value  of  $13.00, 
and  this  same  $26.00  as  it  was  returned  was  reloaned  by  the  clearing 
house  to  some  other  borrower,  and  to  this  extent  the  syndicate's 
interests  were  transferred  to  some  other  loan,  not  as  a  matter  of 
any  record,  but  as  a  matter  of  fact  and  fiscal  transaction. 

Mr.  Borrower  received  credit  in  dividends  on  his  $13.00 $  032 

Mr.  Syndicate  got  credit  in  dividends  on  $1,000— $13=$987.00. .  24  68 
We  will  allow  the  extra  half  cent  in  dividends  to  the  syndicate, 

to  clear  the  transactions  of  fractions  in  final  results. 
The  next  six  months  Mr.  Borrower  installed  $26.00  more  with 
an  average  value  of  $13.00,  and  as  he  did  not  get  any  rebate 
on  the  first  six  months  installment  of  $26.00  he  has  to  his 
credit,   on   which   he   is  entitled  to  dividend,  the   sum   of 

$26.00  plus  $13.00=$39.00,  dividend  equals 97 

Mr.   Svndicate  then  gets  credits   in   dividends   on  $1,000.00— 

$39.00=$961.00  and  dividend  equals 24  03 

$50  00 
[241] 


CHAPTER  XX. 

The  rebate  not  being  allowed  the  first  year  did  not  enter  into 
the  calculation. 

Then  at  end  of  year  the  financial  statement  would  be : 

Interest  received    $62  40 

Borrower  received  in  dividends  first  6  months $  0  32 

Borrower  received  in  dividends  second  6  months 97 

Syndicate  received  in  dividends  first  6  months 24  68 

Syndicate  received  in  dividends  second  six  months 24  03 

$50  00      50  00 

Total  net  earning  to  building  association  or  clearing  house $12  40 

The  above  demonstrates  our  contention. 

At  the  beginning  of  the  year  the  clearing  house  still  had 
$1,000.00,  but  now  $52.00  belongs  as  a  credit  to  Mr.  Bor- 
rower and  only  $948.00  to  original  syndicate  capital;  the 
$52.00  of  original  syndicate  capital  is  now  placed  else- 
where in  loans.  But  we  must  show  a  distribution  of  interest 
earned  on  $1,000.00  by  the  clearing  house  or $62  40 

In  the  first  place  Mr.  Borrower  now  gets  6%  rebate  on  $52.00 
instead  of  5%  for  the  year,  amounting  to $  3  12 

He  then  gets  6  months  dividend  on  $13.00 32 

He  then  gets  second  6  months  dividends  on  $39.00. ...        97 

Syndicate      then      gets      6      months      dividends      on 

$948.00— $13.00=:$935.00   23  38 

Syndicate    then    gets    second    6   months    dividend    on 

$948.00-439.0O=$9O9.0O    22  73 

$52  52      50  52 

Total  net  earnings  end  second  year $11  88 

Third  year,  interest  due  clearing  house $62  40 

•Rebate  to  borrower $  6  24 

First  6  months'  dividend 32 

Second  6  months'  dividend 97 

Dividend    to    syndicate    first    6    months    on    $896.00 — 

$13.00=$883.00   22  08 

Dividend  to  syndicate  second  6  months  on  $896.00— 

$39.00=$857.00    21  43 

Total  allowances  $51  04      51  04 

Third  year  total  net  earning $11  36 

[242] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

And  so  the  earnings  will  continue  to  decrease  in  proportion  as 
the  balance  due  the  association  decreases,  as  shown  in  trapezoids 
L,  M.  N. 

If  the  annual  profits  on  a  loan  of  $1,000.00,  as  shown  above,  are 
so  small,  and  grow  smaller  from  year  to  year,  the  question  naturally 
arises,  where  does  the  association  get  its  money  to  pay  expenses,  etc. 
While  the  above  shows  what  is  taking  place  in  regard  to  the  profits 
on  loans,  it  must  be  borne  in  mind  that  the  association  does  not  keep 
money  idle,  and  that  the  $52.00  returned  each  year  is  immediately 
loaned  out  to  some  other  borrower,  so  that  the  association  is  always 
receiving  approximately  the  profit  of  $12.40  per  thousand  on  out- 
standing mortgage  loans,  as  shown  the  first  year  above,  or  simply 
the  difference  between  the  interest  it  charges,  of  $62.40  per  thousand 
and  the  5%  dividends  it  allows  its  members  for  the  use  of  its  money. 
This  shows  in  a  most  emphatic  manner  the  mutuality  and  great 
beneficence  of  the  building  associations  of  this  country, 

SOURCES  OF  PROFIT. 

If  this,  however,  was  the  only  source  of  profit,  the  associations 
would  scarcely  be  able  to  pay  their  way  and  continue  in  existence. 
There  are  a  number  of  other  sources  of  small  profits. 

1st.  Some  associations  charge  initiation  fees  (although  it  is 
almost  entirely  abolished  by  associations  in  Ohio),  and  this  is  all 
profit. 

2d.     There  is  a  small  profit  made  on  pass-books. 

3d.  A  premium  is  usually  charged  for  the  preference  in  obtain- 
ing a  loan,  or  as  a  settled  policy  of  the  management  of  the  association, 
which  is  another  small  source  of  profit. 

4th.  There  is  what  is  called,  in  insurance  parlance,  the  lapse 
element.  Members  draw  out  their  dues  from  week  to  week  and 
get  no  dividends  on  them. 

5th.  Most  associations  levy  fines  of  5  or  10  cents  per  share 
for  delinquency  of  payments,  some  associations  limiting  this  charge 
to  borrowers  only. 

6th,  Many  associations  now  have  large  reserves  and  undivided 
profit  funds,  which,  of  course,  are  not  idle,  and  the  full  earnings  per 
year  per  thousand  is  all  profit  on  these. 


[243] 


CHAPTER  XX. 
DECLARING  2^%  DIVIDENDS  SEMI-ANNUALLY. 

Prepared  by  W.  11.  Jones,  Public  Accountant,  Cincinnati,  O. 

In  the  Report  of  the  Ohio  State  Inspector  of  Building  Associations 
for  the  year  1909,  on  page  12,  under  heading  "Miscellaneous  Informa- 
tion," will  be  found  the  following : 

"Average  rate  of  dividend  declared  by  all  associations  in 
Ohio,  5.36.%" 

This  indicates  that  the  vast  majority  of  the  Ohio  associations  do 
not  pay  more  than  5%  dividends. 

EXPLANATION. 

The  following  method  of  declaring  a  5%,  or  rather  a  semi-annual 
dividend  of  2J^%,  is  used  by  one  of  our  leading  secretaries,  to  wit: 
2J^%  reduced  to  a  decimal  is  2.5%.  To  remove  the  decimal  we 
should  have  to  multiply  it  by  10,  which  would  then  give  25%  (twenty- 
five  per  cent).  It  is  apparent  and  well  known  that  25%  is  one- fourth, 
but  it  is  not  so  apparent  or  well  known  that  2.5%  is  one- fortieth, 
or  the  same  number  (4),  as  a  divisor,  with  a  cipher  to  the  right  (40). 
Now  if  one  wanted  to  know  what  25%  of  $400.00  amounted  to  it 
would  only  be  necessary  to  divide  the  $400.00  by  4  and  the  result 
obtained  would  be  $100.00. 

Suppose  we  take  a  larger  amount,  say  $864.00,  and  perform  the 
operation  by  this  short  method :  4)864     You  will  note  that  we  get  the 

216 
answer  by  placing  the  quotient  directly  under  the  figures  which  are 
divided  by  the  divisor,  4.    Now  in  order  to  divide  by  40  to  get  2^^% 
we  simply  ignore  the  cipher  and  divide  by  4,  but  place  the  answer  one 
place  to  the  right,  so  40)864.00  or  by  cancelling  one  cipher  in  each — 

21.60 
the  divisor  and  dividend — we  get  4)86.40 

21.60 

It  will  therefore  be  seen  that  after  a  secretary  has  figured  out 
and  extended  the  averages  for  each  member  in  his  dividend  book 
(there  will  not  be  any  cents  in  the  averages,  the  unit  dollars  being 
the  last  figure  on  the  right)  it  will  only  be  necessary  to  begin  at 
the  top  and  divide  each  amount  by  4  and  carefully  place  the  quotient 
one  place  to  the  right,  as  shown  above. 


[244] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

By  this  method  a  page  of  fifty  accounts  may  be  calculated  and 
extended  in  fifteen  minutes  after  you  become  thoroughly  familiar 
with  it.  All  that  is  required  is  accuracy  in  dividing  by  4,  and  care 
in  placing  the  answer  in  the  right  position  for  dollars  and  cents  in 
the  "Total  for  Dividend"  column. 

To  verify  add  the  total  column  of  averages  and  the  total  dividend 
column.  Divide  the  former  total  by  4  and  you  should  get  the  latter 
(when  correct).  If  they  do  not  agree  within  a  few  cents  you  will 
find  that  it  is  because  you  have  odd  unit  dollar  figures  in  your  aver- 
ages, where  you  dropped  a  half  cent  in  the  dividends.  Run  your 
eye  up  the  unit  column  of  averages  and  count  the  number  of  them 
(not  the  sum  of  them)  and  divide  this  number  by  2;  if  the  answer  is 
even  you  will  obtain  the  exact  difference  in  your  footing;  if  you 
get  an  odd  number  after  dividing  by  2  your  answer  will  be  the  exact 
difference  within  a  half  cent.  If  it  does  not  prove  in  this  manner 
you  have  made  an  error  somewhere. 

Take  the  following  illustration: 

The  first  column  of  figures  below  represents  your  averages  entitled 
to  dividend,  the  second  column  the  amount  of  the  dividend.     Divide 
the  former  by  4  and  you  see  the  results  in  the  latter  and  just  how 
they  should  be  placed  as  explained  above. 
Averages 


entitled 

Total 

to  Div'd 

Div'ds 

28.00 

.70 

14.00 

.35 

12.00 

M 

27.00* 

m 

86.00 

2.15 

95.00* 

2.37 

140.00 

3.50 

2fi0.00 

6.50 

3R5.00* 

9.62 

490.00 

12.25 

1,000.00 

25.00 

36.00 

.90 

13.00* 

.32 

26.00 

.65 

52.00 

1.30 

4)12.664.00  $66.58 

66.60 
♦  Shows  four  odd  unit  figures  in  your  averages.    Divide  4  by  2 

(54  cent  difference  on  each  one)  and  you  get  2,  which  is  the  2  cents 
difference  between  your  total  footing  for  dividends  and  your  quotient 
after  dividing  total  of  averages  by  4. 

[245] 


CHAPTER  XX. 

PERPETUAL  WEEKLY  CALENDAR. 
HOW  TO  MAKE  IT. 

How  to  find  the  number  of  weeks  between  two  given  dates  on 
the  same  day  of  the  week. 


1889 

1890 

_l 

1891 

1 

Jan. 

1 

2 

3 

4 

5 

6 

7 

! 
1 

Jan. 

31 

1 

2 

3 

4 

5 

6 

53 

Jan. 

30 

31 

1 

2 

3 

4 

5 

105 

8 

9 

10 

11 

12 

13 

14 

2 

7 

8 

9 

10 

11 

12 

13 

54 

6 

7 

8 

9 

10 

11 

12 

106 

15 

16 

17 

18 

19 

20 

21 

3 

14 

15 

16 

17 

IS 

19 

20 

55 

13 

14 

15 

16 

17 

18 

19 

107 

22 

23 

24 

25 

26 

27 

28 

4 

21 

22 

23 

24 

25 

26 

27 

56 

20 

21 

22 

23 

24 

25 

26 

108 

Feb. 

29 

30 

31 

1 

2 

3 

4 

5 

Feb. 

28 

29 

30 

31 

1 

2 

3 

57 

Feb. 

27 

28 

29 

30 

31 

1 

2 

109 

5 

6 

7 

8 

9 

10 

11 

6 

4 

5 

6 

7 

8 

9 

10 

58 

3 

4 

5 

6 

7 

8 

9 

110 

12 

13 

14 

15 

16 

17 

18 

7 

11 

12 

13 

14 

15 

16 

17 

59 

10 

11 

12 

13 

14 

15 

16 

111 

19 

20 

21 

22 

23 

24 

25 

8 

18 

19 

20 

21 

22 

23 

24 

60 

17 

18 

19 

20 

21 

22 

23 

112 

Mar. 

26 

27 

28 

1 

2 

3 

4 

9 

Mar. 

25 

26 

27 

28 

1 

2 

3 

61 

Mar. 

24 

25 

26 

27 

28 

1 

2 

113 

5 

6 

7 

8 

9 

10 

11 

10 

4 

5 

6 

7 

8 

9 

10 

62 

3 

1  4 

5 

6 

7 

8 

9 

114 

12 

13114 

15 

16 

17 

18 

11 

111 

12 

13 

14 

15 

16 

17 

63 

10 

11 

12 

13 

14 

15 

16 

115 

19 

20 

21 

22 

23 

24 

25 

12 

18 

19 

20 

21 

22 

23 

24 

64 

17 

18 

19 

20 

21 

22 

23 

116 

Apr. 

26 

27 

28 

29 

30 

31 

1 

13 

25 

26 

27 

28 

29 

30 

31 

65 

24 

25 

26 

27 

28 

29 

30 

117 

2 

3 

4 

5 

6 

7 

8 

14 

Apr. 

1 

2 

3 

4 

5 

6 

7 

66 

Apr. 

31 

1 

2 

3 

4 

5 

6 

118 

9 

10 

11 

12 

13 

14 

15 

15 

8 

9 

10 

11 

12 

13 

14 

67 

7 

8 

9 

10 

11 

12 

13 

119 

16 

17 

18 

19 

20 

21 

22 

16 

15 

16 

17 

18 

19 

20 

21 

68 

14 

15 

16 

17 

18 

19 

20 

120 

23 

24 

25 

26 

27 

28 

29 

17 

22 

23 

24 

25 

26 

27 

28 

69 

21 

22 

23 

24 

25 

26 

27 

121 

May 

30 

1 

2 

3 

4 

5 

6 

18 

May 

29 

30 

1 

2 

3 

4 

5 

70 

May 

28 

29 

30 

1 

2 

3 

4 

122 

7 

8 

9 

10 

11 

12 

13 

19 

6 

7 

8 

9110 

11 

12 

71 

5 

6 

7 

8 

9 

10 

11 

123 

14 

15 

16 

17 

18 

19 

20 

20 

13 

14 

15 

16 

17 

18 

19 

72 

12 

13 

14 

15 

16 

17 

18 

124 

21 

22 

23 

24 

25 

26 

27 

21 

20 

21 

22 

23 

24 

25 

26 

73 

19 

20 

21 

22 

23 

24 

25 

125 

June 

28 

29 

30 

31 

1 

2 

31  22 

June 

27 

28 

29 

30 

31 

1 

2 

74 

June 

26 

27 

28 

29 

30 

31 

1 

126 

4 

5 

6 

7 

8 

9 

10 

23 

3 

4 

5 

6 

7 

8 

9 

75 

2 

3 

4  5 

6 

7 

8 

127 

11 

12 

13 

14 

15 

16 

17 

24 

10 

11 

12 

13 

14 

15 

16 

76 

9 

10 

11  12 

13 

14 

15 

128 

18 

19 

20 

21 

22 

23 

24 

25 

17 

18 

19 

20 

21 

22 

23 

77 

16 

17 

18  19 

20 

21 

22 

129 

July. 

25 

26 

27 

28 

29 

30 

1 

26 

24 

25 

26 

27 

28 

29 

30 

78 

23 

24 125 (26 

27 

28 

29 

130 

2 

3 

4 

5 

6 

7 

8 

27 

July. 

1 

2 

3 

4 

5 

6 

7 

79 

July. 

30|  11  2i   3 

4 

5 

6 

131 

9 

10 

11 

12 

13 

14 

151  28 

8 

9 

10 

11 

12 

13 

14 

80 

7 

8 

9  10 

11 

12 

13 

132 

16 

17 

18 

19 

20 

21 

22 

29 

15 

16 

17 

18 

19 

20 

21 

81 

14 

15 

16 

17 

18 

19 

20 

133 

23 

24 

25 

26 

27 

28 

29 

30 

22 

23 

24 

25 

26 

27 

28 

82 

21 

22 

23 

24 

25 

26 

27 

134 

Aug. 

30 

31 

1 

2 

3 

4 

5 

31 

Aug. 

29 

30 

31 

1 

2 

3 

4 

83 

Aug. 

28 

29 

30 

31 

1 

2 

3 

135 

6 

7 

8 

9 

10 

11 

12 

32 

5 

6 

7 

8 

9 

10 

11 

84 

4 

5 

6 

7 

8 

9 

10 

136 

13 

14 

15 

16 

17 

18 

19 

33 

12 

13 

14 

15 

16 

17 

18 

85 

11 

12 

13 

14 

15 

16 

17 

137 

20 

21 

22 

23 

24 

25 

26 

34 

19 

20 

21 

22 

23 

24 

25 

86 

18 

19 

20 

21 

22 

23 

24 

138 

Sep. 

27 

28 

29 

30 

31 

1 

2 

35 

Sep. 

26 

27 

28 

29 

30 

31 

1 

87 

25 

26 

27  28 

29 

30 

31 

139 

8 

4 

5 

6 

7 

8 

9 

36 

2 

3 

4 

5 

6 

7 

8 

88 

Sep. 

1 

2 

3 

4 

5 

6 

7 

140 

10 

11 

12 

13 

14 

15 

16 

37 

9 

10 

11 

12 

13 

14 

15 

89 

8 

9 

10 

11 

12 

13 

14 

141 

17 

18 

19 

20 

21 

22 

23 

38 

16 

17 

18 

19 

20 

21 

22 

90 

15 

16 

17 

18  19 

20 

21 

142 

24 

25 

26 

27 

28 

29 

30 

39 

23 

24 

25 

26 

27 

28 

29 

91 

22 

23 

24 

25 

26 

27 

28 

143 

Oct. 

1 

2 

3 

4 

5 

6 

7  40 

Oct. 

30 

1 

2 

3 

4 

5 

6 

92 

Oct. 

29 

30 

1 

2 

3 

4 

5 

144 

8 

9 

10 

11 

12 

13 

14 

41 

7 

8 

9 

10 

11 

12 

13 

93 

6 

7 

8 

9 

10 

11 

12 

145 

15 

16 

17 

18 

19 

20 

21 

42 

14 

15 

16 

171 

18 

19 

20 

94 

13 

14 

15 

16 

17 

18 

19 

146 

22 

23 

24 

25 

26 

27 

28 

43 

21 

22 

23 

24 

25 

26 

27 

95 

20 

21 

22 

23 

24 

25 

26 

147 

Nov. 

29 

30 

31 

1 

2 

3 

4 

44 

Nov. 

28 

29 

30 

31 

1 

2 

3 

96 

Nov. 

27 

28 

29 

30 

31 

1 

2 

148 

5 

6 

7 

8 

9 

10 

11 

45 

4 

5 

6 

7 

8 

9 

10 

97 

3 

4 

5 

6 

7 

8 

9 

149 

12 

13 

14 

15 

16 

17 

18 

46 

11 

12 

13 

14 

15 

16 

17 

98 

10 

11 

12 

13 

14 

15 

16 

150 

19 

20 

21 

22 

23 

24 

25 

47 

18 

19 

20 

21 

22 

23 

24 

99 

17 

18 

19 

20 

21 

22 

23 

151 

Dec. 

26 

27 

28 

29 

30 

1 

2 

48 

Dec. 

25 

26 

27 

28 

29 

30 

1 

100 

24 

25 

26 

27 

28 

29 

30 

152 

3 

4 

5 

6 

7 

8 

9 

49 

2 

3 

4 

5 

6 

7 

8 

101 

Dec. 

1 

2 

3 

4 

5 

6 

7 

153 

10 

11 

12 

13 

14 

15 

16 

50 

9 

10 

11 

12 

13 

14 

15 

102 

8 

9 

10 

11 

12  13 

14 

154 

17 

18119 

20 

211 

22 

231 

51 

16 

17 

18 

19 

20 

21 

22 

103 

15 

16 

17 

18 

19  20 

21 

155 

24 

25|26 

27|28l 

29  30! 

52 

23 

24  25 

26  27|28|29| 

104 

22|23l'24| 

25 

26  27  28( 

166 

[246] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


This  calendar  is  a  sample  page  for  three  years — 1889-'90-'91 — 
showing  how  it  may  be  constructed,  for  an  indefinite  number  of  years, 
to  give  the  dates  by  the  week,  and  have  them  numbered  consecutively. 
If  the  weekly  meeting  starts  on  January  2,  1889,  then  the  dates  for 
each  week,  for  52  weeks,  down  to  December  25th,  are  shown  in  the 
second  column,  and  their  numerical  consecutive  order  in  the  eighth 
column,  1  to  52. 

Each  of  the  seven  columns  of  dates  show,  in  the  same  way,  the 
weekly  meetings  according  to  the  different  dates  of  starting,  as 
shown  in  first  seven  days  of  January. 

If  you  do  not  wish  to  keep  it  for  any  other  dates  except  the  one 
for  your  individual  requirements,  then  you  need  only  make  it  with 
one  column  of  weekly  dates. 

If  you  want  it  to  start  with  the  first  meeting  of  your  association, 
then  all  you  have  to  do  is  to  get  a  perpetual  calendar  of  regular 
form,  covering  a  period  of  50  or  more  years,  with  index  number  for 
the  years,  and  prepare  the  series  of  years  in  the  manner  shown, 
beginning  number  one  with  the  date  of  your  first  meeting,  and  then 
continue  it  from  year  to  year,  or  extend  it  for  a  period  of  years 
in  advance.  (A  perpetual  calendar  such  as  referred  to  above  fol- 
lows on  next  few  pages.) 

Such  a  calendar  enables  the  secretary  to  ascertain  the  number 
of  meetings  between  any  two  dates  a  member  should  have  paid 
dues,  and  the  amount.  For  instance:  suppose  a  borrower  starts 
on  January  16,  1889,  and  you  want  to  ascertain,  on  December  4,  1889, 
both  dates  inclusive,  what  he  owes,  or  should  have  paid.  You  look 
to  the  right  opposite  December  4th  and  you  find  No.  49  in  the 
numerical  column,  and  opposite  January  16,  1889,  you  find  No.  3  in 
the  same  manner.  Now  in  order  to  include  the  meeting  of  January 
16th  you  must  either  take  the  number  directly  preceding,  which 
would  be  2,  or  always  subtract  1  from  the  number  opposite  the 
date  of  beginning,  thus,  3 — 1=2.  Now  subtract  2  from  49,  or 
49 — 2=47,  and  you  get  the  total  number  of  meetings  he  should  have 
paid.  If  you  wished  to  find  the  lapsed  time  for  which  interest 
was  due,  instead  of  the  number  of  weeks  dues  should  have  been 
paid,  then  you  take  the  exact  numbers  opposite  the  dates  between 
which  you  want  to  ascertain  the  number  of  weeks  interest  should 
have  been  paid,  to  wit :  49—3=  46  weeks  for  interest. 

When  an  association  has  advanced  pretty  well  along  in  years  you 
will  readily  see  how  very  valuable  and  useful,  for  quick  results  in 
calculation,  such  a  consecutive  numerical  order  of  meetings  becomes. 


[247] 


CHAPTER  XX. 


DIRECTIONS— Find  the  year  wanted  in  the  Index  below.  The  number 
opposite  is  the  number  of  the  calendar  for  that  year,  which  will  be  found  in 
one  of  the   following  panels. 


VEAR 

NO 

YEAR 

NO 

YEAB 

NO. 

YEAR 

NO. 

YEAR 

NO. 

1866 10        1876.. 

....14        1896 

2        1897 

3        1898 

.11        1916 14        1936 11 

.   6        1917 2        1937 6 

.   7        1918 3        1938 7 

J.857 5        1877.. 

J858 6        1878.. 

J859 7         1879.. 

4         1899 1         1919 4        1989 1 

I860 8        1880.. 

12        1900 2        1920 12        1940 9 

1861 3        1881.. 

7        1901 8        1921 7         1941 4 

1862 4        1882.. 

1        1902 4        1922 1        1942 6 

1863 h        1883 . . 

....2        1903 

10        1904 

5        1905 

.    5        1923 2         1943 6 

.13         1924 10        1944 14 

.   1        1925 5        1945 2 

1864 13        1884.. 

J865 1        1885.. 

J866 2        1886.. 

....6        1906 2        1926 6        1946 8 

1867 8        1887.. 

....7        1907 3        1927 7        1947 4 

1868 11        1888.. 

....8        1908 11        1928 8        1948 12 

1869 6        1889.. 

....3         1909 6        1929 3         1949 7 

1870 7        1890.. 

....4        1910 7        1930 4        1950 1 

1871 1        1891.. 

....5        1911 1         1931 5        1951 2 

1872 9        1892.. 

....13        1912 9        1932 13        1952 10 

1878 4        1893.. 

1        1913 4        1933 1         1953 5 

1874 5        1894.. 

....2         1914 
....3        1915 

.    5        1934 2         1954 6 

.    6        1935 3         1955 7 

1876 6        1895.. 

.... 

1 

2 

Jaa. 

Hai. 
April 

Bay 
Jane 

8 
"i 

8 
15 

22 
28 

"i 

12 

'i 

"5 

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[248] 


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The  years  for  which  this  Calendar  standBl 

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[249] 


CHAPTER  XX. 


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3 

4 

5   f 

7 

2 

3 

4    5 

6 

7 

5  ( 

7   8 

9  10 

11 

4  5  ( 

7  8  J  10 

10,11 

1215 

!•? 

15 

16 

t 

IC 

11  12 

If 

14  1.S 

21J 

14  15 

1617;i8 

1112K 

14  15  16  17 

171fl 

19  20  21l22j23 

16 

17 

18  1^ 

20 

2122 

9i2r 

21  2? 

18  It  2 

21  22  2J  24 

24  25 

28  27&|29|30 

25.24 

25  26J27 

28  29 

: 

»|27 

28  29 

30|...|... 

25  26  2' 

28|29  30  31 

30J31 



Tho  years  for  which  this  Calendar  etanda 

The  years  for  which  this  Calendar  stands 

are  found  In  the  Index. 

are  found  in  the  Index. 

9 

10 

n^ 

M 

TW 

TF 

sl 

8MT 

wIt  F  8 

s 

M 

T 

w 

T 

F 

8 

8 

M 

T 

W 

T  F  sl 

— 1 

— 

Jaa... 

\ 

2   3 

4  5 

61 

July ...  1  2 
J  7  9  9 

3    4   5   C 

Jan. 

1 

2 

3 

4 

5 

Julj 

•^ 

1 

2 

3  4 

6 

i 

9  10 

11 12 

13 1 

0  11  12  13 1 

6 

7 

8 

Si 

If 

11 

12 

7 

8 

9 

10 11 121 

1 

15  16  17 

IH  19 

20 

14  15  16 

[7  1819  20 

13 

14 

15 

10 

17 

18 

19 

13 

14 

15 

16 

17  18,19 

2 

,22  23  24 

25  2<J 

i7 

2122  23 

24  25  26  27 

20 

21 

22 

23 

24 

A 

26 

20 

21 

22 

23 

24 

25  261 

2 

29  30  31 

,       282S  30 

31 

V 

?a 

29 

30 

31 

Aug. 

2/ 

28 

2i 

30 

31 

... 

Feb... 

i  "6  "e  "i 

1    2 

a  9 

3 

10 

A^. ......... 

..123 

7    8    940 

Feb. 

1 

a 

2 
9 

"3 

'4 

... 
6 

"6 

"7 

1 
8 

2 
9 

3 

4 

5 

6 

7 

1 

S!?Sg 

15  16 

17 

11  12  13 

14  15  16  17 

10 

11 

12 

13  141 

15 

16 

IC 

11 

12 

13 

14 

15 

16 

1 

^Z'£i 

-M 

18  19  20 
25  26  27 

21  22  23  24 

17 

18 

19 

20  21 

22 

Zi 

17 

18 

19 

20 

21 

'22 

23 

«».? 

5  26 

27  28 

29... 
1 

■?, 

28  29  30  31 

ffir 

24 

25 

26 

27 

28 

2a 

24 
31 

25 

26 

27 

28 

29 

30 

^  4 

5   6 

7  a 

9 

Sept.  i  2  J 

"      8   9  10 

4    6    6   7 

2 

3 

4 

5 

6 

7 

8 

8eil 

1 

2 

3 

4 

5 

6 

1 

)11 

12  If 

14  15 

16 

11  12  13  14 

f 

10 

11 

12 

13 

14 

15 

7 

8 

9 

K 

11 

12 

13 

1 

'18 

1ft  2r 

21  n 

a 

15  IC  17 

18  19  20  21 

16 

17 

18 

19 

20 

21 

22 

14 

15 

1« 

17 

u 

19 

20 

2 

i% 

26  27 

28  2S 

;» 

22  23  24 

25  26  27  28 

23 

?A 

2") 

26 

27 

28 

29 

21 

22 

2a 

24 

26 

26 

27 

..nl' 

04!!*-i 

"2  "3  "4  "5 

April 

30 

3. 

Od 

28 

29 

so 

'1 

"i 

"3 

■4 

1 

2    3 

4    6 

6 

1 

2 

3 

4 

5 

7   f 

9  10 

11  12 

13 

6   7   8 

9 10  11  12 

6 

7 

8 

f 

10 

11 

g 

5 

6 

7 

8 

9 

10 

11 

1 

4  15 

1fil7 

18  19 

M 

13  14  15 

16  17  18  19 

13 

14 

15 

16 

17 

18 

12 

la 

14 

16 

16 

17 

181 

7 

1  n 

•K^?A 

VA  26 

27 

20  2122 

23  24  25  26 

?0 

21 

22 

?.'' 

24 

25 

26 

n 

2(J 

21 

22 

23 

24 

26 

f^-x* 

V)  .  . 

„      27  2S29 

30  31  

?7 

W 

29 

30 

2« 

27 

2i 

2(1 

30 

81 

>.. 

tj. 

...    1 

7  a 

2   3 
910 

4 

Nov 

3    4    6 

May 

1 
8 

2 
9 

3 
10 

Hot. 

F)   fi 

6   7    8   9 

4 

5 

6 

"7 

2 

8 

4 

.?, 

6 

.1 

8 

I 

?13 

14  15 

Ifl  17 

18 

10  11  12 

13  14  15  16 

11 

12 

13 

14 

15 

16 

17 

t 

U 

11 

12 

U 

14 

ili' 

1 

(♦flf) 

2122 

23  2/4 

25 

17  18  19 

2C  21  22  23 

18 

19 

W 

21 

00 

23 

24 

« 

1; 

It 

19 

2C 

21 

22 

.       2 

B27 

28  29 

30  31 

24  25  26 

27  28  29  30 

25 

26 

27 

28  29 

3C 

31 

Z 

24 

26 

26 

27 

28 

2U 

Jne. 

^3 

"4  "6 

"«  "7 

1 

DWL"i"2"3 



4    5   6   7 

im 

Dea 

30 

1 

2 

3 

"4 

5 

B 

7 

1 

2 

3 

4 

6 

6 

1)10 

11  12 

1314 

15 

«    9  10 

11  12  13  14 

8 

9 

10 

11 

12 

13 

14 

1 

t 

9 

10 

11 

12 

13 

1 

R17 

18  19 

?n?i 

22 

15  16  17 

IJ  19  20  21 

15 

16 

17 

18 

19 

ar 

21 

14 

15 

1( 

17 

18 

19 

20 

2 

'$24 

25  26 

27  28 

29 

22  23  24 

25  26  27  28 

i 

23 

24 

?,5 

26 

27 

28 

21 

22 

25 

24 

26 

26 

27 

3 

a... 

... 

29  30  31 



30 

... 

.- 

28 

29 

au 

31 

... 

— 

The  years  for  which  this  Calendar  stands 
ore  found  in  the  Index. 

The  years  for  which  this  Calendar  Btan< 

3s 

axe  found  In  the  Index. 

[250] 


PERPETUAL  CALENDAR. 


11 


12 


— 

8  M 

T 

W 

T 

F  8 

1 

»|- 

T 

w 

T 

F  8 

liii" 

1 

2 

3    4 

Yd, 

... 

1 

2 

3   4 

f,  a 

7 

n 

t 

U  II 

6!  6 

7 

8 

S 

10  11 

12' 13 

1^ 

151 U 

'i'i 

12|l3il4 

15 

16 

17118 

IflZf) 

21 

22  2J 

19 

2()'21 

22|2:( 

24  2S| 

vr.w 

2ti 

29i3(> 

31 

2<1 

27 

28 

29  :u 

31 

r«ih 

1 

Aag. 

I 

2   3 

41  6  e 

7 

8 

2 

3 

4 

5 

« 

7 

8 

»10 

11|12  U 

14 

15 

« 

10 

11 

12 

U 

14 

18 

l«'l7 

18  19  20|2li22 

IfiilT 

l!=  1(1 

22 

2.' 

24 

25  26  27  28,29 

2SI24 

26  2!J 

27  28 

•JH 

Iv. 

8.pt 

30^31 

"i  "2 

jj  "4 

"i 

J 

?. 

3   4   5    6   7 

f 

9 

101112  13  14 

fl 

7 

t    9 

K  It 

12 

IS 

16 

17llfel!9  20  21 

i;i 

14 

15  16 

17  IH 

19 

??. 

23 

24  a,-) 

26  27 

28 

2f 

21 

C2'2324!25 

20 

1 

'i>;:io 

31  ... 

27 

W 

28,30 

..   .. 

Apnl 

...... 

...    1 

2 

i 

4 

M 

... 

1    2 

3 

5   H 

7   t 

9 

ir 

11 

4 

5 

n 

7 

f    { 

10 

12!l3 

U  15  16 

17 

IS 

11 

12 

13 

14 

15  16 

"\ 

19,a)  21122123 

2-1 

25 

18!I9 

20 

21 

22 

23 

w 

^J 

26  27|28J28,30 

25 

26 

27 

28 

29 

dO 

31. 

"8 

4    6  6   7 

8 

0 

Not. 

"i 

"2 

"s 

"4 

•5 

"e 

*' 

K 

11  12  13  14 

15 

1fi> 

X 

9 

K 

11 

12  13 

1< 

17 

18  19  20  21 

22 

23 

15 

in 

17 

18 

10|2(1 

21 1 

•M 

20  26  272 

2S 

30, 

22 

2:{ 

24  2& 

2Sl 

L. 

31 

Dee. 

29 

» 

l-i 

■«|"4 

...1 

12   3   4 

A 

fll 

7 

8   S  10  11 

17  13 

e 

7 

f    « 

1011 

12 

U 

15  18|I7  IH 

19I20 

IS 

14 

15  U 

171« 

19 

21 

22|23'24|3S;20  27| 

7(1 

21 

22  23  24  25 

» 

28 

29i30|...|...i...|...f 

27 

28 

29  30|3l|„. 

The  yean  for  which  this  Calendar  KBiids  (1 

are  found  in  the  Index.                || 

8 

M 

T 

W 

T 

F 

8 

8  M 

TW|T 

7 

8 

Jn 

1 

2 

3 

j.i, 

1 

2 

8 

4 

8 

« 

7 

8 

i 

10 

■4  'f> 

«l  7 

»i 

ti 

10 

11 

12 

19 

14 

16116 

17 

1112 

13i14 

15 

If 

17 

18I19I2C 

21 

22'2a 

24 

i8|it[a] 

21122 

a 

24 

Feb. 

25 

28 

27 

28 

29 

-M 

31 

A«« 

26 

" 

28 

29 

30 

31 

1 

2 

3 

4 

n 

ti 

7 

1 

2|8|4 

n 

6 

•J 

S 

flK 

11 

12 

li 

14 

S 

10 

11 

12 

IS 

14 

15  18  17 

Ifl 

19^2(1 

21 

15 

16 

17 

Ifl 

Id 

W 

21 

22  23*1 

25 

ae 

27 

28 

22  23 

24 

25  28 

27 

28 

Iir. 

29 

Sept 

voar 

31 

"i 

"i 

"si 

12 

8 

4 

6 

6 

... 

1    81  S 

10 

11 

12 

13 

n 

6 

7 

8 

f 

ir 

)] 

14  15  lA 

17 

18  19 

20 

12 

13 

14 

15 

16 

17 

18 

21 

22'2J 

24 

25  26 

27 

10 

20 

21 

222a 

24 

25 

28 

29,:«l 

31 

af  27 

28 

2fl 

3r 

Apnl 

f 

2 

3 

(Id 

.., 

I 

4 

«lfl 

7 

8 

9 

10 

J 

4 

ft 

(1 

1 

8 

11 

i7.ii;( 

14 

15 

16 

17 

If 

11 

1.1 

14 

15 

16 

18 

IS 

2n 

21 

22 

23 

24 

17 

Ifl 

IS 

2n 

21 

22  23 
29  30 

Bar 

% 

28 

27 

28 

20 

30 

24 

26 

M 

27 

£ 

•2 

'« 

"4 

"5 

... 
6 

-, 

i 

8 

Ifof. 

31 

"1 

"2 

"8 

"4 

•«•« 

16|l718 

I? 

13 

14 

IS 

7 

8 

t 

10 

11 

12  13 

IS 

20 

21 

22 

14 

16 

w 

17 

« 

1920 

23:24 

25 

211 

27 

21 

■nzi 

24 

25  28:271 

Jne 

"i 

2 

■3 

If* 

Utt, 

28 

•a 

". 

"2 

ii 

f 

9 

10 

11  12! 

5 

fl  7 

8 

ii 

lo'ii 

IS^lIllS 

16 

17  18!l9i 

12 

13 

14 

15 

1« 

17,18 

a0  21!22l23'24;25|2e| 

li:20 

21 

22 

23!:il,28i 

27  23!29,30]. ........ 

26|27  28|29 

30l3l|... 

Tbe  years  for  which  this  Calendar  BtandB 

are  found  in  tbe  Index. 

13 


10  11  12  13 

17^819  20 
^25  28  27 


8  M  TW  T  F  8 


1  2 

7   8   9 
14  IS  16 

21;22|23 

28129  30 


4   6   6 

11  1213 

1930 

25  26  27 

■4' 6 

11  12 

18  19 

28 

"2 
9 
IS 


I 

14115;.. 

21|22  23 
28  29  30 

4  "6  "is    .,  . 
1112lS^1415 

-'     -    21-- 

28  29  SO 


6   6   7 
12  13  14 

19,2021 
26  27  28 


J«lj 


Ang, 


Sept 


Oct 


71  Hot. 


1  2  3  4 
81  gionu 

15  16117181 

22  23:24  250 
29.30.. 


The  years  for  which  this  Calendar  stands 
arc  found  in  tbe  Index. 


14 


8  M  T WT  F  8 


5   6 
12  13 

19i20 
[26  27 


w, 


6   7    8 
13  14  18 

20  2122 
27  28  29 


del 


Dec 


8  MTWT  F  8 


21122  23 
27i28i29  30 


8 
15 

1415 

2021I22 
27  28129 


The  years  for  whicb  this  Calendar  Btands 
are  found  in  tbe  Index. 


[251] 


CHAPTER  XXI. 


Distribution  of  Earnings — Permanent  Plan. 


CALCULATION  OF  DIVIDEND  AND  INTEREST. 

There  is  a  great  necessity  for  the  utmost  care  in  the 
calculation  and  distribution  of  dividends.  It  has  happened 
that  associations,  on  account  of  carelessness  or  incom- 
petency in  this  connection,  have  become  greatly  embar- 
rassed. Great  care  should  be  taken  in  making  the  calcula- 
tions for  the  amounts  available  for  dividends,  so  that  the 
exact  rate  be  established.  Unfortunately,  there  is  lack  of 
uniformity  in  the  calculation  of  dividends  and  interest, 
by  the  various  associations,  which  makes  it  impossible  to 
give  specific  rules  that  will  apply  to  all  associations.  Some 
of  the  methods  are  cumbrous  and  in  some  instances  inac- 
curate, causing  unnecessary  work  and  vexation,  which 
could  be  avoided  by  the  substitution  of  a  more  scientific 
standard.  The  periodical  calculation  of  dividends  and 
interest  is  the  most  arduous  task  in  the  regular  routine 
of  a  secretary's  work,  and  it  is  to  his  interest,  as  well  as 
the  association,  that  he  make  use  of  the  most  improved 
methods. 

A  large  number  of  dividend  and  interest  tables  have 
been  prepared.  Several  of  these  tables  which  are  in  more 
general  use,  and  have  given  good  satisfaction,  are  printed 

[252] 


DISTRIBUTION  OF  EARNINGS. 

herewith.  They  will  be  very  valuable  for  use  in  those 
associations  following  the  same  plan  upon  which  the  tables 
are  based. 

APPLICATION   OF   PROFITS. 

Profits  should  be  applied  as  follows : 

1.  To  the  payment  of  expenses. 

2.  Such  portion  as  may  be  determined  semi-annually 
or  annually  by  the  board  of  directors,  should  be  set  aside 
as  a  reserve  fund  for  the  payment  of  contingent  losses  in 
conformity  with  the  law. 

3.  Such  portions  as  may  be  determined  semi-annually 
or  annually  by  the  board  of  directors  shall  be  credited  to 
the  account  of  the  members  as  a  dividend,  according  to 
their  average  investment. 

4.  The  residue  may  be  placed  in  an  undivided  profit 
fund  in  conformity  with  the  law. 

PERMANENT  PLAN— SYSTEM  I. 

The  following  tables  and  explanation  are  furnished  by 
Mr.  W.  L.  Davis  and  verified  by  Mr.  Chas.  H.  Stewart. 

EXPLANATION. 

Example  of  the  First  Semi-Annual  Dividend:  A  has  one  share, 
$1.00  weekly  dues.  He  has  paid  for  six  months,  or  twenty-six  weeks. 
The  dividend  declared  is  eight  per  cent  (semi-annual).  What  is 
A's  portion? 

Turn  to  the  8  per  cent  tables  (page  261).  Opposite  26,  the  num- 
ber of  weeks  A  has  paid  $1.00,  you  find  $1.08,  which  is  the  amount 
of  $26.00  at  8  per  cent  for  twenty-six  weeks  upon  the  usual  computa- 

[253] 


CHAPTER  XXI. 

tion  of  averages,  or,  in  other  words,  the  proportion  of  dividend 
declared  which  is  due  A. 

Example  of  the  second  and  all  subsequent  dividends:  B  has 
three  shares  (of  $1.00  per  share  dues).  He  has  paid  $402.00.  The 
dividend  declared  is  five  per  cent  (semi-annual).  What  is  B's 
portion  ? 

Subtract  from  $402.00,  the  amount  he  has  paid  since  the  last 
dividend,  $3.00  per  night  for  twenty-six  weeks,  or  $78.00.  Find  5 
per  cent  of  the  difference,  $324.00;  which  is  $16.20,  or  dividend  upon 
$324.00.  Now  turn  to  the  five  per  cent  tables  (page  258).  Opposite 
26,  the  number  of  weeks  B  has  paid  $3.00  since  the  last  settlement, 
you  find  $2,025  in  the  three-share  column,  which  is  the  amount  of 
dividend  on  $78.00;  now  add  $2,025  to  $16.20.  The  result,  $18,225, 
is  the  amount  of  dividend  due  B  on  $402.00. 


[2541 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500. — Dues,  $1.00  per  week. 

TWO  PER  CENT  TABLES. 


No. 

One 

Two 

Thbee 

FODR 

Five 

Weeks 

Share 

Shabes 

Shares 

Shares 

Shares 

1 

2 

.012 

3 

.010 

.013 

.020 

.023 

4 

.015 

.023 

.030 

.040 

5 

.011 

.023 

.035 

.046 

.060 

G 

.016 

.032 

.048 

.065 

.081 

7 

.021 

.043 

.065 

.086 

.110 

8 

.027 

.055 

.083 

.110 

.140 

0 

.034 

.069 

.104 

.138 

.173 

10 

.042 

.084 

.128 

.169 

.212 

11 

.050 

.101 

.148 

.203 

.254 

12 

.000 

.120 

.180 

.240 

.300 

13 

.070 

.140 

.210 

.280 

.350 

U 

.080 

.161 

.242 

.323 

.404 

15 

.092 

.185 

.277 

.370 

.462 

16 

.104 

.209 

.314 

.420 

.523 

17 

.117 

.235 

.353 

.470 

.590 

18 

.131 

.263 

.395 

.526 

.660 

19 

.146 

.292 

.438 

.585 

.731 

20 

.161 

.323 

.485 

.646 

.810 

21 

.177 

.355 

.533 

.710 

.890 

22 

.194 

.390 

.584 

.780 

.973 

23 

.212 

.424 

.636 

.850 

1.061 

24 

.230 

.461 

.692 

.923 

1.154 

25 

.250 

.500 

.750 

1.000 

1.250 

26 

.270 

.540 

.810 

1.080 

1.350 

[255] 


CHAPTER  XXL 
Shares,  $500.— Dues,  $1.00  per  week. 

THREE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

2 

.011 

.014 

.020 

3 

.014 

.020 

.027 

.034 

4 

.011 

.023 

.034 

.045 

.057 

5 

.017 

.035 

.052 

.070 

.087 

6 

.024 

.048 

.073 

.097 

.121 

7 

.032 

.065 

.097 

.130 

.162 

8 

.041 

.083 

.124 

.165 

.207 

9 

.051 

.104 

.155 

.207 

.269 

10 

.063 

.127 

.192 

.254 

.318 

11 

.076 

.152 

.222 

.305 

.381 

12 

.090 

.180 

.270 

.360 

.450 

13 

.105 

.210 

.315 

.420 

.525 

14 

.121 

.242 

.364 

.485 

.606 

15 

.138 

.277 

.415 

.554 

.693 

16 

.157 

.314 

.470 

.627 

.784 

17 

.176 

.353 

.529 

.705 

.882 

18 

.197 

.395 

.592 

.790 

.987 

19 

.219 

.438 

.658 

.877 

1.096 

20 

.242 

.485 

.727 

.970 

1.212 

21 

.266 

.533 

.799 

1.065 

1.332 

22 

.292 

.584 

.875 

1.167 

1.459 

23 

.318 

.636 

.955 

1.273 

1.591 

24 

.345 

.692 

1.040 

1.385 

1.721 

25 

.375 

.750 

1.125 

1.500 

1.875 

26 

.410 

.810 

1.215 

1.620 

2.025 

[256] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500.— Dues,  $1.00  per  week. 

FOUR  PER  CENT  TABLES. 


No. 

One 

Two 

Thrbk 

Four 

Five 

Weeks 

Shabe 

Shakes 

Shakes 

Shares 

Shares 

1 

2 

.010 

.014 

.020 

.024 

3 

.018 

.027 

.037 

.046 

4 

.015 

.031 

.045 

.061 

.076 

5 

.023 

.046 

.069 

.093 

.116 

6 

.032 

.065 

.097 

.130 

.162 

7 

.043 

.086 

.129 

.173 

.216 

8 

.055 

.110 

.165 

.221 

.276 

9 

.069 

.140 

.207 

.277 

.346 

10 

.085 

.169 

.255 

.340 

.424 

11 

.101 

.203 

.305 

.406 

.510 

12 

.120 

.240 

.360 

.480 

.600 

13 

.122 

.280 

.420 

.560 

.700 

14 

.161 

.323 

.485 

.646 

.810 

15 

.185 

.370 

.554 

.740 

.924 

16 

.209 

.420 

.627 

.837 

1.046 

17 

.235 

.470 

.705 

.940 

1.176 

18 

.263 

.526 

.790 

1.053 

1.316 

19 

.292 

.585 

.877 

1.170 

1.462 

20 

.323 

.646 

.970 

1.293 

1.616 

21 

.355 

.710 

1.065 

1.421 

1.776 

22 

.389 

.7.^0 

1.167 

1.557 

1.946 

23 

.424 

.850 

1.273 

1.697 

2.122 

24 

.460 

.923 

1.384 

1.846 

2.310 

25 

,500 

1.000 

1.500 

2.000 

2.500 

26 

.540 

1.080 

1.620 

2.160 

2.700 

[2571 


CHAPTER  XXL 
Shares,  $500.— Dues,  $1.00  per  week. 

FIVE  PER  CENT  TABLES. 


T 


No. 

One 

Twq 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

2 

.012 

.020 

.024 

.030 

3 

.011 

.023 

.034 

.046 

.057 

4 

.020 

.039 

.057 

.076 

.095 

5 

.029 

.058 

.087 

.116 

.145 

6 

.040 

.081 

.121 

.162 

.202 

7 

.054 

.108 

.162 

.215 

.270 

8 

.069 

.140 

.207 

.276 

.345 

9 

.086 

.173 

.260 

.346 

.432 

10 

.106 

.212 

.320 

.424 

.530 

11 

.127 

.254 

.381 

.510 

.635 

12 

.150 

.300 

.450 

.600 

.750 

13 

.175 

.350 

.525 

.700 

.875 

14 

.202 

.404 

.606 

.810 

1.010 

15 

.231 

.462 

.693 

.924 

1.155 

16 

.261 

.523 

.784 

1.046 

1.307 

17 

.294 

.590 

.882 

1.176 

1.470 

18 

.329 

.660 

.987 

1.316 

1.645 

19 

.365 

.731 

1.096 

1.462 

1.827 

20 

.404 

.810 

1.212 

1.616 

2.020 

21 

.444 

.890 

1.332 

1.776 

2.220 

22 

.486 

.973 

1.460 

1.946 

2.432 

23 

.530 

1.061 

1.591 

2.122 

2.652 

24 

.577 

1.154 

1.731 

2.310 

2.885 

26 

.625 

1.250 

1.875 

2.500 

3.125 

26 

.675 

1.350 

2.025 

2.700 

3.375 

[258] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500.— Dues,  $1.00  per  week. 

SIX  PER  CENT  TABLES. 


NO. 

Omk 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.012 

2 

.014 

.021 

.030 

.036 

3 

.014 

.028 

.041 

.055 

.070 

4 

.023 

.047 

.068 

.091 

.114 

5 

.035 

.065 

.104 

.140 

.174 

6 

.048 

.097 

.146 

.194 

.243 

7 

.065 

.129 

.194 

.260 

.324 

8 

.083 

.165 

.248 

.331 

.414 

9 

.104 

.207 

.311 

.415 

.520 

10 

.127 

.254 

.383 

.510 

.636 

11 

.152 

.305 

.457 

.610 

.762 

12 

.180 

.360 

.540 

.720 

.900 

13 

.210 

.420 

.630 

.840 

1.050 

14 

.242 

.485 

.727 

.970 

1.212 

15 

.277 

.554 

.830 

1.110 

1.386 

16 

.314 

.627 

.941 

1.255 

1.570 

17 

.353 

.705 

1.058 

1.411 

1.764 

18 

.395 

.789 

1.184 

1.580 

1.974 

19 

.438 

.877 

1.316 

1.754 

2.193 

20 

.485 

.970 

1.454 

1.940 

2.424 

21 

.533 

1.065 

1.598 

2.131 

2.664 

22 

.584 

1.167 

1.800 

2.335 

2.920 

23 

.636 

1.273 

1.910 

2.546 

3.183 

24 

.692 

1.385 

2.077 

2.770 

3.462 

25 

.750 

1.500 

2.250 

3.000 

3.750 

26 

.810 

1.620 

2.430 

3.240 

4.050 

[259] 


CHAPTER  XXI. 
Shares,  $5C0.— Dues,  $1.00  per  week. 

SEVEN  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.011 

.014 

2 

.017 

.025 

.033 

.042 

3 

.016 

.032 

.048 

.064 

.080 

4 

.026 

.054 

.080 

.106 

.133 

5 

.040 

.081 

.122 

.162 

.203 

6 

.056 

.113 

.170 

.227 

.283 

7 

.075 

.151 

.227 

.302 

.380 

8 

.096 

.193 

.289 

.386 

.483 

9 

.121 

.242 

.363 

.484 

.605 

10 

.148 

.297 

.447 

.593 

.742 

11 

.178 

.355 

.533 

.711 

.890 

12 

.210 

.420 

.630 

.840 

1.050 

13 

.245 

.490 

.735 

.960 

1.225 

U 

.283 

.565 

.850 

1.151 

1.414 

15 

.323 

.647 

.970 

1.293 

1.617 

m 

.366 

.732 

1.098 

1.464 

1.830 

17 

.411 

.823 

1.235 

1.646 

2.060 

18 

.460 

.921 

1.381 

1.842 

2.303 

19 

.512 

1.023 

1.535 

2.047 

2.560 

20 

.565 

1.131 

1.697 

2.262 

2.830 

21 

.621 

1.243 

1.864 

2.486 

3.110 

22 

.681 

1.362 

2.043 

2.724 

3.405 

23 

.736 

1.485 

2.230 

2.971 

3.713 

24 

.808 

1.615 

2.423 

3.231 

4.040 

25 

.875 

1.750 

2.625 

3.500 

4.375 

26 

.945 

1.890 

2.835 

3.780 

4.725 

[260] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500.— Dues,  $1.00  per  week. 

EIGHT  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.013 

.016 

2 

.020 

.029 

.040 

.050 

3 

.018 

.037 

.055 

.073 

.092 

4 

.030 

.062 

.091 

.121 

.152 

5 

.046 

.093 

.140 

.185 

.232 

6 

.065 

.129 

.194 

.260 

.324 

7 

.086 

.173 

.260 

.345 

.432 

8 

.110 

.221 

.331 

.441 

.552 

9 

.138 

.277 

.415 

.553 

.692 

10 

.169 

.340 

.511 

.680 

.850 

11 

.203 

.406 

.610 

.813 

1.016 

12 

.240 

.480 

.720 

.960 

1.200 

13 

.280 

.560 

.840 

1.120 

1.400 

14 

.323 

.646 

.970 

1.293 

1.616 

15 

.369 

.740 

1.108 

1.478 

1.850 

m 

.418 

.837 

1.255 

1.673 

2.092 

17 

.470 

.941 

1.411 

1.881 

2.352 

18 

.526 

1.053 

1.580 

2.105 

2.632 

19 

.585 

1.170 

1.754 

2.340 

2.924 

20 

.646 

1.293 

1.940 

2.585 

3.232 

21 

.710 

1.421 

2.131 

2.841 

3.552 

22 

.778 

1.557 

2.335 

3.113 

3.892 

23 

.856 

1.697 

2.546 

3.395 

4.244 

24 

.923 

1.846 

2.770 

3.693 

4.616 

25 

1.000 

2.000 

3.000 

4.000 

5.000 

26 

1.080 

2.160 

3.240 

4.320 

5.400 

[261] 


CHAPTER  XXi: 
Shares,  $500.— Dues,  $1.00  per  week. 

NINE  PER  CENT  TABLES. 


No. 

ONE 

Two 

Three 

Four 

Five 

Wekks 

8UAKK 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.014 

.020 

2 

.010 

.021 

.032 

.043 

.054 

3 

.020 

.041 

.062 

.083 

.103 

4 

.034 

.070 

.102 

.137 

.171 

5 

.052 

.104 

.156 

.209 

.261 

6 

.073 

.146 

.218 

.291 

.364 

7 

.097 

.194 

.291 

.389 

.486 

8 

.124 

.248 

.372 

.497 

.621 

9 

.155 

.311 

.467 

.623 

.780 

10 

.191 

.381 

.575 

.763 

.954 

11 

.228 

.457 

.686 

.914 

1.143 

12 

.270 

.540 

.810 

1.080 

1.350 

13 

.315 

.630 

.945 

1.260 

1.575 

U 

.363 

.727 

1.090 

1.454 

1.820 

15 

.416 

.831 

1.247 

1.663 

2.080 

16 

.471 

.941 

1.412 

1.8.S3 

2.353 

17 

.529 

1.060 

1.587 

2.117 

2.646 

18 

.592 

1.184 

1.776 

2..  370 

2.961 

19 

.658 

1.316 

1.973 

2.631 

3.290 

20 

.727 

1.454 

2.181 

2.909 

3.636 

21 

.799 

1.600 

2.397 

3.197 

3.996 

22 

.876 

1.751 

2.627 

3.503 

4.380 

23 

.955 

1.910 

2.864 

3.820 

4.770 

24 

1.038 

2.077 

3.116 

4.154 

5.193 

25 

1.125 

2.250 

3.375 

4.500 

5.625 

26 

1.215 

2.430 

3.645 

4.860 

6.075 

f262] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500. — Dues,  $1.00  per  week. 


TEN  PER  CENT  TABLES. 


NO. 

One 

Two 

Three 

Pour 

Five 

Weeks 

Share 

Sharks 

Shares 

Shares 

Shares 

1 

.010 

.012 

.016 

.020 

2 

.012 

.024 

.036 

.050 

.060 

B 

.023 

.046 

.070 

.092 

.115 

4 

.040 

.078 

.114 

.152 

.190 

5 

.060 

.116 

.174 

.232 

.290 

6 

.081 

.162 

.243 

.824 

.405 

7 

.108 

.216 

.324 

.432 

.540 

8 

.138 

.276 

.414 

.552 

.690 

9 

.173 

.346 

.520 

.692 

.865 

10 

.212 

.424 

.640 

.850 

1.060 

11 

.254 

.510 

.762 

1.016 

1.270 

12 

.300 

.600 

.900 

1.200 

1.500 

13 

.350 

.700 

1.050 

1.400 

1.750 

14 

.404 

.810 

1.212 

1.616 

2.020 

15 

.462 

.924 

1.386 

1.850 

2.310 

16 

.523 

1.046 

1.569 

2.092 

2.615 

17 

.590 

1.176 

1.764 

2.352 

2.940 

18 

.660 

1.316 

1.974 

2.632 

3.290 

19 

.731 

1.462 

2.193 

2.924 

3.655 

20 

.810 

1.616 

2.424 

3.232 

4.040 

21 

.890 

1.776 

2.664 

3.552 

4.440 

22 

.973 

1.946 

2.919 

3.892 

4.865 

23 

1.061 

2.122 

3.183 

4.244 

5.305 

24 

1.154 

2.308 

3.462 

4.616 

5.770 

25 

1.250 

2.500 

3.750 

5.000 

6.250 

26 

1.350 

2.700 

4.050 

5.400 

6.750 

{a«3] 


CHAPTER  XXI. 
Shares,  $500.— Dues,  $1.00  per  week. 


ELEVEN  PER  CENT  TABLES. 


No. 

One 

Two 

Thbeb 

Four 

Five 

WXSKS 

Share 

Shabes 

Shabes 

Shares 

Shares 

1 

.010 

.013 

.020 

.022 

2 

.013 

.026 

.040 

.053 

.066 

3 

.025 

.050 

.076 

.101 

.126 

4 

.042 

.086 

.125 

.167 

.210 

5 

.064 

.127 

.191 

.255 

.320 

6 

.089 

.178 

.267 

.:H56 

.445 

'    .  7 

.119 

.237 

.356 

.475 

.594 

'      8 

.152 

.303 

.455 

.607 

.760 

9 

.190 

.380 

.571 

.761 

.951 

10 

.233 

.466 

.703 

.933 

1.166 

11 

.279 

.560 

.840 

1.117 

1.397 

12 

.330 

.660 

.990 

1.320 

1.650 

13 

.385 

.770 

1.155 

1.540 

1.925 

U 

.444 

.890 

1.333 

1.777 

2.222 

15 

.510 

1.016 

1.524 

2.033 

2.541 

16 

.575 

1.150 

1.726 

2.301 

2.876 

17 

.647 

1.293 

1.940 

2.587 

3.234 

18 

.724 

1.447 

2.171 

2.895 

3.620 

19 

.804 

1.610 

2.412 

3.216 

4.020 

20 

.889 

1.777 

2.666 

3.555 

4.444 

21 

.977 

1.953 

2.930 

3.907 

4.884 

22 

1.070 

2.140 

3.211 

4.281 

5.351 

23 

1.167 

2.334 

3.501 

4.670 

5.835 

24 

1.266 

2.540 

3.810 

5.077 

6.347 

25 

1.375 

2.750 

4.125 

5.500 

6.875 

26 

1.485 

2.970 

4.455 

5.940 

7.425 

[264] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $500.— Dues,  $1.00  per  week. 

TWELVE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

FIVB 

Weeks 

Share 

Shares 

Shares 

Shares 

Sharks 

1 

.010 

.014 

.020 

.024 

2 

.014 

.030 

.043 

.057 

.072 

3 

.027 

.055 

.083 

.110 

.140 

4 

.045 

.093 

.137 

.182 

.230 

5 

.070 

.139 

.209 

.278 

.350 

6 

.097 

.194 

.291 

.389 

.486 

7 

.130 

.260 

.389 

.520 

.650 

8 

.165 

.331 

.497 

.662 

.830 

9 

.207 

.415 

.623 

.830 

1.040 

10 

.254 

.510 

.767 

1.017 

1.272 

11 

.305 

.609 

.914 

1.220 

1.524 

12 

.360 

.720 

1.080 

1.440 

1.800 

13 

.420 

.840 

1.260 

1.680 

2.100 

14 

.485 

.970 

1.454 

1.940 

2.424 

15 

.554 

1.110 

1.663 

2.217 

2.772 

16 

.627 

1.255 

1.883 

2.510 

3.140 

17 

.705 

1.411 

2.117 

2.822 

3.530 

18 

.790 

1.580 

2.369 

3.160 

3.950 

19 

.877 

1.756 

2.631 

3.510 

4.386 

20 

.970 

1.940 

2.909 

3.880 

4.850 

21 

1.065 

2.131 

3.197 

4.260 

6.330 

22 

1.167 

2.335 

3.503 

4.670 

5.840 

23 

1.273 

2.546 

3.820 

5.093 

6.366 

24 

1.381 

2.770 

4.154 

5.540 

6.924 

25 

1.500 

3.000 

4.500 

6.000 

7.500 

26 

1.620 

3.240 

4.860 

6.480 

8.100 

[265] 


CHAPTER  XXI. 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 


TWO  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

\Ar£BKS 

Shabk 

Shabes 

Shares 

Shares 

Shares 

1 

2 
3 

.010 

.010 

4: 

.012 

.015 

.020 

5 

.\fll 

.020 

.023 

.030 

6 

,010 

.016 

.024 

.033 

.040 

7 

aMO 

.021 

.033 

.043 

.054 

8 

.013 

.027 

.042 

.055 

.070 

9 

..017 

.034 

.052 

.070 

.086 

10 

.021 

.043 

.064 

.084 

.106 

n 

.026 

.050 

.074 

.101 

.127 

It  ^ 

•     ,030 

.060 

.090 

.120 

.150 

n 

.035 

.070 

.105 

.140 

.175 

14 

.an 

.080 

.121 

.161 

.202 

15 

.046 

.093 

.138 

.184 

.232 

16 

.052 

.104 

.157 

.210 

.261 

17 

.053 

.117 

.177 

.235 

.294 

18 

.065 

.131 

.198 

.263 

.329 

19 

.073 

.146 

.220 

.293 

.365 

20 

.080 

.131 

.243 

.323 

.404 

21 

.090 

.177 

.267 

.355 

.444 

22 

.097 

.194 

.292 

.390 

.486 

23 

.101 

.212 

.320 

.424 

.530 

24 

.116 

.230 

.346 

.461 

.677 

25 

.125 

.250 

.375 

.500 

.625 

26 

.135 

.270 

.405 

.540 

.675 

[266] 


DISTRIBUTION  OF  EARNINGS.     * 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 


THREE  PER  CENT  TABLES. 


NO. 

One 

Two 

Three 

Foxm 

FIVB 

WKEK8 

Shark 

Shares 

Shares 

Shares 

Shabxs 

1 

2 

.010 

3 

.010 

.014 

.017 

4 

.011 

.017 

.022 

.030 

5 

.010 

.018 

.026 

.034 

.043 

6 

.012 

.024 

.037 

.050 

.060 

7 

.016 

.033 

.050 

.064 

.081 

8 

.020 

.042 

.062 

.082 

.103 

9 

.026 

.052 

.077 

.103 

.130 

10 

.031 

.063 

.095 

.127 

.160 

11 

.040 

.076 

.111 

.162 

.190 

12 

.045 

.090 

.135 

.180 

.225 

13 

.052 

.105 

.157 

.210 

.262 

14 

.060 

.121 

.181 

.243 

.303 

15 

.070 

.138 

.207 

.277 

.346 

16 

.080 

.157 

.235 

.313 

.892 

17 

.090 

.177 

.264 

.352 

.441 

18 

.100 

.200 

.296 

.394 

.493 

19 

.104 

.220 

.330 

.440 

.550 

20 

.121 

.243 

.363 

.484 

.606 

21 

.133 

.267 

.400 

.532 

.666 

22 

.146 

.292 

.437 

.583 

.730 

23 

.160 

.320 

.480 

.636 

.795 

24 

.172 

.346 

.520 

.693 

.860 

25 

.187 

.375 

.562 

.750 

.937 

26 

.205 

.408 

.607 

.810 

1.012 

[267] 


CHAPTER  XXI. 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 


FOUR  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

SHARE 

Shares 

Shares 

Shares 

Shares 

1 

2 

.010 

.012 

3 

.010 

.013 

.020 

.023 

4 

.015 

.022 

.031 

.040 

5 

.011 

.023 

.034 

.047 

.060 

6 

.016 

.033 

.050 

.064 

.081 

7 

.021 

.043 

.064 

.087 

.110 

8 

.022 

.055 

.082 

.111 

.140 

9 

.034 

.069 

.103 

.140 

.173 

10 

.043 

.084 

.127 

.170 

.212 

11 

.050 

.101 

.153 

.203 

.254 

12 

.060 

.120 

.180 

.240 

.300 

13 

.061 

.140 

.210 

.280 

.350 

14 

.080 

.161 

.243 

.323 

.404 

15 

.093 

.184 

.277 

.370 

.462 

16 

.104 

.209 

.313 

.420 

.523 

17 

.117 

.235 

.352 

.471 

.590 

18 

.131 

.263 

.400 

.526 

.660 

19 

.146 

.293 

.440 

.584 

.732 

20 

.161 

.323 

.484 

.647 

.810 

21 

.177 

.355 

.532 

.711 

.890 

22 

.194 

.390 

.583 

.780 

.973 

23 

.212 

.425 

.636 

.850 

1.061 

24 

.230 

.461 

.693 

.923 

1.154 

25 

.250 

.500 

.750 

1.000 

1.250 

26 

.270 

.540 

.810 

1.080 

1.350 

[268] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $250  or  $500.— Dues,  50c.  per  week. 


FIVE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shakes 

Shares 

Shares 

Sharks 

1 

2 

.010 

.012 

.015 

3 

.011 

.017 

.023 

.030 

4 

.010 

.020 

.030 

.040 

.047 

5 

.014 

.030 

.043 

.060 

.072 

6 

.020 

.040 

.060 

.081 

.101 

7 

.027 

.054 

.081 

.107 

.140 

8 

.034 

.070 

.103 

.140 

.172 

9 

.043 

.086 

.130 

.173 

.216 

10 

.053 

.106 

.160 

.212 

.265 

11 

.063 

.127 

.190 

.254 

.317 

12 

.070 

.150 

.225 

.300 

.375 

13 

.087 

.170 

.262 

.350 

.437 

14 

.101 

.202 

.303 

.404 

.505 

15 

.115 

.231 

.346 

.462 

.577 

16 

.130 

.261 

.392 

.523 

.653 

17 

.147 

.294 

.441 

.590 

.735 

18 

.164 

.330 

.493 

.660 

.822 

19 

.182 

.360 

.550 

.731 

.913 

20 

.202 

.404 

.606 

.808 

1.010 

21 

.222 

.444 

.666 

.890 

1.110 

22 

.243 

.486 

.730 

.973 

1.216 

23 

.265 

.530 

.795 

1.061 

1.326  ! 

24 

.290 

.577 

.865 

1.154 

1.442  j 

25 

.312 

.620 

.932 

1.250 

1.562  ( 

26 

.337 

.670 

1.012 

1.350 

1.687  i 

[269] 


CHAPTER  XXI. 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 


SIX  PER  CENT  TABLES. 


No. 
Weeks 


1 

2 
3 

4: 

5 
6 
7 
8 
9 
10 
11 
12 
13 
U 
15 
16 
17 
18 
19 
20 
21 
32 
23 
24 
26 
26 


One 
Share 


,012 

,020 
,024 
.033 
.041 
.052 
.063 
.076 
.090 
.105 
.121 
.140 
.157 
.177 
.197 
.220 
.243 
.266 
.292 
.320 
.346 
.375 
.405 


Two 
Shares 


014 
,024 
.032 
.050 
.064 
.082 
.103 
.127 
.153 
.180 
.210 
.243 
.277 
.313 
.352 
.394 
.440 
.484 
.532 
.583 
.636 
.693 
.750 
.810 


Three 

Shares 


.010 
.020 
.034 
.052 
.073 
.097 
.124 
.155 
.191 
.230 
.270 
.315 
.363 
.415 
.470 
.530 
.597 
.657 
.727 
.800 
.900 
.954 
1.040 
1.125 
1.210 


Four 
Shares 


.015 

.027 

.045 

.070 

.097 

.130 

.165 

.207 

.255 

.304 

.360 

.420 

.484 

.554 

.627 

.705 

.790 

.877 

.970 

1.065 

1.167 

1.273 

1.384 

1.500 

1.620 


Five 
Shares 


.020 

.034 

.054 

.087 

.121 

.162 

.207 

.260 

.320 

.381 

.450 

.525 

.606 

.693 

.784 

.882 

.987 

1.096 

1.212 

1.332 

1.460 

1.591 

1.731 

1.875 

2.025 


[270] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 

|i_ 

SEVEN  PER  CENT  TABLES. 


NO. 

Onx 

Tvro 

Thkee 

FOXTR 

Fnr» 

Weeks 

Share 

Shakes 

Shares 

SHARES 

Shares 

1 

2 

MO 

.012 

.016 

.021 

3 

.010 

.016 

.024 

.032 

.040 

4 

.013 

.027 

.040 

.053 

.066 

5 

.020 

.040 

.061 

.081 

.101 

6 

.030 

.056 

.085 

.113 

.141 

7 

.037 

.075 

.114 

.151 

.190 

8 

.060 

.096 

.145 

.193 

.241 

9 

.060 

.121 

.181 

.242 

.302 

10 

.074 

.147 

.223 

.296 

.371 

11 

.090 

.177 

.266 

.355 

.444 

12 

.105 

.210 

.315 

.420 

.525 

13 

.122 

.245 

.367 

.480 

.612 

14 

.142 

.282 

.424 

.575 

.707 

15 

.162 

.324 

.485 

.646 

.810 

16 

.183 

.366 

.550 

.732 

.915 

17 

.205 

.411 

.617 

.823 

1.030 

18 

.230 

.460 

.691 

.921 

1.151 

19 

.250 

.511 

.767 

1.024 

1.280 

20 

.282 

.565 

.850 

1.131 

1.414 

21 

.320 

.621 

.933 

1.243 

1.554 

22 

.340 

.681 

1.021 

1.362 

1.702 

23 

.367 

.742 

1.114 

1.486 

1.856 

24 

.403 

.807 

1.211 

1.615 

2.020 

25 

.437 

.875 

1.312 

1.750 

2.187 

26 

.472 

.995 

1.412 

1.890 

2.362 

[271] 


CHAPTER  XXI. 
Shares,  $250  or  $500.— Dues,  50c.  per  week. 

EIGHT  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Sharks 

Shares 

1 

.010 

2 

.010 

.015 

.020 

.024 

3 

.010 

.020 

.027 

.036 

.046 

4 

.015 

.031 

.045 

.060 

.076 

5 

.023 

.047 

.070 

.092 

.116 

6 

.033 

.065 

.097 

.130 

.162 

7 

.043 

.087 

.130 

.172 

.216 

8 

.055 

.111 

.165 

.220 

.276 

9 

.070 

.140 

.207 

.276 

.346 

10 

.084 

.170 

.255 

.340 

.424 

11 

.101 

.203 

.304 

.407 

.510 

12 

.120 

.240 

.360 

.480 

.600 

13 

.140 

.280 

.420 

.560 

.700 

14 

.161 

.323 

.484 

.647 

.810 

15 

.184 

.370 

.555 

.740 

.924 

16 

.210 

.420 

.627 

.836 

1.046 

17 

.230 

.471 

.705 

.940 

1.176 

18 

.263 

.527 

.790 

1.052 

1.316 

19 

.293 

.584 

.877 

1.170 

1.462 

20 

.323 

.647 

.970 

1.292 

1.616 

2! 

.355 

.711 

1.065 

1.420 

1.776 

22 

.390 

.780 

1.16?. 

1.556 

1.946 

23 

.430 

.850 

1.273 

1.697 

2.122 

24 

.461 

.923 

1.384 

1.847 

2.310 

25 

.500 

1.000 

1.500 

2.000 

2.500 

26 

.540 

1.080 

1.620 

2.160 

2.700 

[272] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $250  or  $500.— Dues,  50c.  per  week. 

NINE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

FIVK 

Weeks 

Shark 

Shares 

SHARES 

Shares 

Shares 

1 

.010 

2 

.010 

.016 

.021 

.027 

3 

.010 

.020 

.031 

.042 

.051 

4 

.017 

.035 

.051 

.070 

.085 

5 

.026 

.052 

.090 

.105 

.130 

6 

.037 

.073 

.110 

.145 

.182 

7 

.050 

.097 

.145 

.195 

.243 

8 

.062 

.124 

.186 

.250 

.310 

9 

.080 

.155 

.233 

.312 

.390 

10 

.096 

.190 

.287 

.381 

.477 

11 

.114 

.230 

.343 

.457 

.571 

12 

.135 

.270 

.405 

.540 

.625 

13 

.157 

.315 

.472 

.630 

.787 

U 

.181 

.363 

.545 

.727 

.910 

15 

.210 

.415 

.623 

.831 

1.040 

16 

.235 

.470 

.706 

.942 

1.176 

17 

.264 

.530 

.793 

1.060 

1.323 

18 

.296 

.592 

.890 

1.185 

1.480 

19 

.330 

.660 

.986 

1.315 

1.644 

20 

.363 

.727 

1.090 

1.455 

1.820 

21 

.400 

.800 

1.196 

1.600 

2.000 

22 

.437 

.875 

1.313 

1.752 

2.190 

23 

.480 

.960 

1.432 

1.910 

2.387 

24 

.520 

1.040 

1.560 

2.077 

2.596 

25 

.562 

1.125 

1.687 

2.250 

2.812 

26 

.607 

1.215 

1.822 

2.430 

3.037 

[273] 


CHAPTER  XXI. 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 


TEN  PER  CENT  TABLES. 


No. 

ONE 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.010 

2 

.012 

.020 

.024 

.030 

3 

.011 

.023 

.034 

.046 

.057 

4 

.020 

.040 

.057 

.076 

.095 

5 

.030 

.060 

.087 

.116 

.145 

6 

.040 

.081 

.121 

.162 

.202 

7 

.052 

.110 

.162 

.216 

.270 

8 

.070 

.140 

.207 

.276 

.345 

9 

.086 

.173 

.260 

.341 

.432 

10 

.101 

.212 

.320 

.424 

.530 

11 

.127 

.254 

.381 

.510 

.635 

12 

.150 

.300 

.450 

.600 

.750 

13 

.175 

.350 

.525 

.700 

.875 

14 

.202 

.404 

.606 

.810 

1.010 

15 

.231 

.462 

.693 

.924 

1.155 

16 

.261 

.523 

.784 

1.046 

1.307 

17 

.294 

.590 

.882 

1.176 

1.470 

18 

.330 

.660 

.987 

1.316 

1.645 

19 

.360 

.731 

1.096 

1.462 

1.827 

20 

.404 

.810 

1.212 

1.616 

2.020 

21 

.444 

.890 

1.332 

1.776 

2.220 

22 

.486 

.973: 

1.460 

1.946 

2.432 

23 

.530 

1.061 

1.591 

2.122 

2.652 

24 

.577 

1.154 

1.731 

2.310 

2.880 

25 

.620 

1.250 

1.875 

2.500 

3.125 

26 

.670 

1.350 

2.025 

2.700 

3.375 

[274] 


DISTRIBUTION  OF  EARNINGS. 
Shares,  $250  or  $500.— Dues,  50c.  per  week. 

ELEVEN  PER  CENT  TABLES. 


No. 

One 

Two 

Thbee 

FOUB 

Five 

Weeks 

Shabe 

Shares 

Shabes 

Shares 

Shabes 

1 

.010 

.011 

2 

.013 

.020 

.027 

.033 

3 

.012 

.025 

.032 

.050 

.063 

4 

.020 

.043 

.062 

.083 

.104 

5 

.032 

.063 

.095 

.127 

.160 

6 

.044 

.090 

.133 

.130 

.222 

7 

.060 

.118 

.180 

.237 

.297 

8 

.076 

.151 

.227 

.303 

.380 

9 

.095 

.190 

.286 

.380 

.475 

10 

.110 

.233 

.302 

.467 

.583 

11 

.140 

.280 

.420 

.560 

.700 

12 

.160 

.330 

.495 

.660 

.825 

13 

.192 

.385 

.577 

.770 

.962 

14 

.222 

.445 

.666 

.890 

1.111 

15 

.254 

.510 

.762 

1.017 

1.270 

16 

.287 

.575 

.862 

1.150 

1.440 

17 

.323 

.686 

.970 

1.293 

1.617 

18 

.362 

.723 

1.085 

1.447 

1.810 

19 

.402 

.804 

1.206 

1.610 

2.010 

20 

.444 

.890 

1.333 

1.777 

2.222 

21 

.487 

.976 

1.465 

1.953 

2.442 

22 

.535 

1.070 

1.605 

2.140 

2.675 

23 

.583 

1.167 

1.755 

2.334 

2.917 

24 

.633 

1.270 

1.954 

2.540 

3.173 

25 

.687 

1.375 

2.062 

2.750 

3.437 

26 

.742 

1.485 

2.227 

2.970 

3.712 

[275] 


CHAPTER  XXL 
Shares,  $250  or  $500. — Dues,  50c.  per  week. 

TWELVE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Wekks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.012 

2 

.014 

.021 

.020 

.036 

3 

.013 

.027 

.042 

.055 

.070 

4 

.022 

.046 

.070 

.091 

.114 

5 

.034 

.070 

.106 

.140 

.174 

6 

.050 

.097 

.145 

.195 

.243 

7 

.064 

.130 

.195 

.260 

.324 

8 

.082 

.165 

.250 

.331 

.414 

9 

.103 

.207 

.311 

.415 

.520 

10 

.127 

.255 

.383 

.510 

.636 

11 

.153 

.304 

.457 

.610 

.762 

12 

.180 

.360 

.540 

.720 

.900 

13 

.210 

.420 

.630 

.840 

1.050 

U 

.243 

.484 

.727 

.970 

1.212 

15 

.277 

.555 

.831 

1.103 

1.386 

16 

.313 

.627 

.941 

1.255 

1.570 

17 

.353 

.705 

1.060 

1.411 

1.764 

18 

.364 

.790 

1.184 

1.580 

1.974 

19 

.440 

.880 

1.315 

1.755 

2.193 

20 

.484 

.970 

1.455 

1.940 

2.424 

21 

.532 

1.065 

1.600 

2.131 

2.664 

22 

.583 

1.167 

1.752 

2.335 

2.920 

23 

.636 

1.273 

1.960 

2.547 

3.183 

24 

.690 

1.384 

2.077 

2.770 

3.462. 

25 

.750 

1.500 

2.250 

3.000 

3.750 

26 

.810 

1.620 

2.430 

3.240 

4.050 

[276] 


DISTRIBUTION  OF  EARNINGS. 


PERMANENT  PLAN— SYSTEM  II. 
EXPLANATION. 

TO    FIND    THE    AMOUNT    UPON    WHICH    DIVIDENDS    FOR    ONE    SHARE    IS    TO 

BE  DECLARED. 

Rule.  Add  together  the  number  of  zveeks  each  Si  has  been 
paid  in.  Divide  this  total  by  the  number  of  weeks  in  the  term.  The 
quotient  gives  the  average  amount  to  he  credited  for  the  entire  term. 

Example.  A  pays  $1  weekly  for  a  term  of  26  weeks.  What  is 
the  average  amount  to  his  credit  at  the  close  of  the  term?  Add 
together  the  number  of  weeks  $1  has  been  paid  in,  each  26,  25,  24, 
etc.,  down  to  1.  The  total  is  351  weeks.  That  is  to  say  the  credits 
to  which  he  is  entitled  on  his  payments  as  he  has  made  them  are 
together  equal  to  a  credit  of  $1  for  351  weeks.  But  |1  for  351  weeks 
is  equal  to  as  many  dollars  for  26  weeks,  as  26  weeks  is  contained  in 
351  weeks,  which  is  13^^  times,  or  $13.50. 

TO  FIND   THE  RATE  PER  CENT  OF  DIVIDEND  TO   BE  DECLARED. 

Rule.  Average  the  amount  to  the  credit  of  each  member  accord- 
ing to  the  above  rule  and  example.  Then  find  the  sum  of  all  the 
average  amounts.  Find  what  per  cent  the  total  profits  are  of  this 
sum  and  this  per  cent  will  give  the  rate  of  dividend  to  be  declared. 

Example.  Suppose  the  association  has  125  members  and  that  the 
total  of  the  averaged  investments  is  $4,050.  Suppose  that  the  profits 
of  the  association  for  the  term  are  $265.  One  per  cent  of  $4,050  is 
$40.50.  $265  will  be  as  many  times  one  per  cent  of  $4,050  as  $40.50 
is  contained  in  it  which  is  Q**/n  times.  Since  it  is  not  convenient 
to  calculate  interest  at  6  **/«i  per  cent  the  rate  of  the  dividend  would 
probably  be  fixed  at  6  per  cent  and  the  small  balance  of  profits  left 
over  after  the  distribution  at  this  rate  would  be  placed  in  the  reserve 
fund. 

TO  FIND  THE  FIRST  DIVIDEND. 

Rule.  Find  the  per  cent  of  the  given  amount  in  the  table  at  the 
given  rate  for  the  dividend. 

Example.  A  has  paid  $1  weekly  on  5  shares  for  15  weeks.  What 
is  is  semi-annual  dividend,  the  rate  being  6  per  cent  per  annum? 
From  the  table  on  page  249  we  find  that  the  average  amount  to  his 
credit  is  $23,10  which  at  6  per  cent  per  annum  gives  him  a  dividend 
of  $0.69. 

[277] 


CHAPTER  XXL 

TO  FIND  AMY  SUCCEEDING  DIVIDEND. 

Rule.  Add  to  the  amount  standing  to  the  credit  of  a  shareholder 
at  the  beginning  of  the  term,  his  average  credit  for  the  term.  From 
this  sum  deduct  any  dues  withdrawn  during  the  term.  The  balance 
will  be  the  amount  upon  which  the  dividend  is  to  be  calculated. 

Example.  A  has  $350  to  his  credit  at  the  beginning  of  the  term. 
He  is  entitled  to  an  average  credit  for  his  payments  during  the  term 
on  his  five  shares  of  $67.50.  This  added  to  the  $350  amounts  to 
$417.50.  Deduct  from  this'  amount  $50  dues  withdrawn,  leaving  a 
balance  of  $367.50  the  amount  upon  which  his  dividend  is  to  be 
based  at  6  per  cent  per  annum.    His  dividend  is  $n.02. 

The  first  of  the  following  tables  shows  the  total  number 
of  weeks'  credit  on  $1  for  the  payments  made  during  a 
term.  The  remaining  tables  show  the  average  amount 
each  shareholder  has  to  his  credit  for  any  number  of  weeks 
from  1  to  26  and  for  any  number  of  shares  from  1  to  10 : 


[278] 


DISTRIBUTION  OF  EARNINGS. 


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[279] 


CHAPTER  XXL 


1  share  at  50  cents. 

2  shares  at  dOc.  or  i  share  at  $1. 

Week. 

DUES. 

Average 
Amount. 

Week. 

DUES. 

Average 
Amount 

1 

.50 

.019 

1 

1.00 

.03 

2 

1.00 

.057 

2 

2.00 

.11 

3 

1.50 

.115 

3 

3.00 

.23 

4 

2.00 

.192 

4 

4.00 

.38 

5 

2.50 

.288 

5 

5.00 

.57 

6 

3.00 

.404 

6 

6.00 

.80 

7 

3.50 

.538 

7 

7.00 

1.07 

8 

4.00 

.692 

8 

8.00 

1.38 

9 

4.50 

.865 

9 

9.00 

1.73 

10 

5.00 

1.06 

10 

10.00 

2.12 

11 

5.50 

1.27 

11 

11.00 

2.54 

12 

6.00 

1.50 

12 

12.00 

3.00 

13 

6.50 

1.75 

13 

13.00 

3.50 

14 

7.00 

2.02 

14 

14.00 

4.04 

15 

7.50 

2.31 

15 

15.00 

4.62 

16 

8.00 

2.62 

16 

16.00 

5.23 

17 

8.50 

2.94 

17 

17.00 

5.88 

18 

9.00 

3.29 

18 

18.00 

6.58 

19 

9.50 

3.65 

19 

19.00 

7.31 

20 

10.00 

4.04 

20 

20.00 

8.08 

21 

10.50 

4.44 

21 

21.00 

8.88 

22 

11.00 

4.86 

22 

22.00 

9.73 

23 

11.50 

5.31 

23 

23.00 

10.62 

24 

12.00 

5.77 

24 

24.00 

11.54 

25 

12.50 

6.25 

25 

25.00 

12.50 

26 

13.00 

6.75 

26 

26.00 

13.50 

[280] 


DISTRIBUTION  OF  EARNINGS. 


3  shares  at  50  cents. 

4  shares  at  dOc.  or  2  shares  at  |1. 

w^ 

DUES. 

Average 
Amount. 

Week. 

DUES. 

A*=t' 

1 

1.50 

.05 

1 

2.00 

.07 

2 

3.00 

.17     1 

2 

4.00 

.22 

8 

4.50 

.34 

3 

6.00 

.46 

4 

6.00 

.57 

4 

8.00 

.76 

5 

7.50 

.86 

5 

10.00 

1.15 

6 

9.00 

1.20 

6 

12.00 

1.61 

7 

10.50 

1.61 

7 

14.00 

2.15 

8 

12.00 

2.07 

8 

16.00 

2.76 

9 

13.50 

2.59     ! 

9 

18.00 

3.46 

10 

15.00 

3.18 

10 

20.00 

4.24 

11 

16.50 

3.81     1 

11 

22.00 

5.08 

12 

18.00 

4.50     1 

12 

24.00 

6.00 

13 

19.50 

5.25 

13 

26.00 

7.00 

14 

21.00 

6.06 

14 

28.00 

8.08 

15 

22.50 

6.93 

15 

30.00 

9.24 

16 

24.00 

7.86 

16 

32.00 

10.48 

17 

25.50 

8.82 

17 

34.00 

11.76 

18 

27.00 

9.87 

18 

36.00 

13.16 

19 

28.50 

10.95 

19 

38.00 

14.60 

20 

30.00 

12.12 

20 

40.00 

16.16 

21 

31.50 

13.32 

21 

42.00 

17.76 

22 

33.00 

14.58 

22 

44.00 

19.44 

23 

34.50 

15.93 

23 

46.00 

21.24 

24 

36.00 

17.31 

24 

48.00 

23.08 

25 

37.50 

18.75 

25 

50.00 

25.00 

26 

39.00 

20.25 

26 

52.00 

27.00 

1281] 


CHAPTER  XXI. 


5  ihares  at  50  cents. 

6  shares  at  90c.  or  3  shares  at  $1. 

Week. 

DUES. 

Average 
Amount. 

Week. 

1 

DUES. 

Average 
Amount. 

1 

2.50 

.09 

3.00 

.11 

2 

5.Q0 

.28 

2 

6.00 

.34 

3 

7.50 

.57 

3 

9.00 

.69 

4 

10.00 

.96 

4 

12.00 

1.15 

5 

12.50 

1.44 

5 

15.00 

1.72 

6 

15.00 

2.02 

6 

18.00 

2.42 

7 

17.50 

2.69 

7 

21.00 

3.22 

8 

20.00 

3.46 

8 

24.00 

4.15 

9 

22.50 

4.32 

9 

27.00 

5.19 

10 

25.00 

5.30 

10 

30.00 

6.36 

11 

27.50 

6.35 

11 

33.00 

7.62 

12 

30.00 

7.50 

12 

36.00 

9.00 

13 

32.50 

8.75 

13 

39.00 

10.50 

14 

35.00 

10.10 

14 

42.00 

12.12 

15 

37.50 

11.55 

15 

45.00 

13.86 

16 

40.00 

13.10 

16 

48.00 

15.72 

17 

42.50 

14.70 

17 

51.00 

17.64 

18 

45.00 

16.45 

18 

54.00 

19.74 

19 

47.50 

18.25 

19 

57.00 

21.90 

20 

50.00 

20.20 

20 

60.00 

24.24 

21 

52.50 

22.20 

21 

63.00 

26.64 

22 

55.00 

24.30 

22 

66.00 

29.16 

23 

57.50 

26.55 

23 

69.00 

31.86 

24 

60.00 

28.85 

24 

72.00 

34.62 

25 

62.50 

31.25 

25 

75.00 

37.50 

26 

65.00 

33.75 

26 

78.00 

40.50 

[282] 


DISTRIBUTION  OF  EARNINGS. 


7  shares  at  50  cents. 

8  shares  at  50c.  or  4  shares  at  $1 

Week. 

DUES. 

Average      1 
Amouirt.      1 

Week. 
1 

DUES. 

Average 
Amount. 

1 

3.50 

.13 

4.00 

.15 

2 

7.00 

.39 

2 

8.00 

.45 

3 

10.50 

.80 

3 

12.00 

.92 

4 

14.00 

1.34 

4 

16.00 

1.53 

5 

17.50 

2.01 

5 

20.00 

2.30 

6 

ai.oo 

2.82 

6 

24.00 

3.23 

7 

24.50 

3.76 

7 

28.00 

4.30 

8 

28.00 

4.84 

8 

32.00 

5.53 

9 

31.50 

6.05 

9 

36.00 

6.92 

10 

35.00 

7.42 

10 

40.00 

8.48 

11 

38.50 

8.89 

11 

44.00 

10.16 

12 

42.00 

10.50 

12 

48.00 

12.00 

13 

45.50 

12.25 

13 

52.00 

14.00 

14 

49.00 

14.14 

14 

56.00 

16.16 

15 

52.50 

16.17 

15 

60.00 

18.48 

16 

56.00 

18.34 

16 

64.00 

20.96 

17 

59.50 

20.58 

17 

68.00 

23.52 

18 

63.00 

23.03 

18 

72.00 

26.32 

19 

66.50 

25.55 

19 

76.00 

29.20 

20 

70.00 

28.28 

20 

80.00 

32.32 

21 

73.50 

31.08 

21 

84.00 

35.52 

22 

77.00 

34.02 

22 

88.00 

38.88 

23 

-    80.50 

37.17 

23 

92.00 

42.48 

24 

84.00 

40.39 

24 

96.00 

46.16 

25 

87.50 

43.75 

25 

100.00 

50.00 

26 

91.00 

47.25 

26 

104.00 

54.00 

[283] 


CHAPTER  XXI. 


9  shares  at  50  cents. 

10  shares  at  50c.  or  5  shares  at  $1. 

Week. 

DUES. 

Average 
Amount. 

Week. 

DUES. 

Average 
Amount. 

1 

4.50 

.17 

1 

5.00 

.19 

2 

9.00 

.51 

2 

10.00 

.57 

3 

13.50 

1.03 

3 

15.00 

1.15 

4 

18.00 

1.72 

4 

20.00 

1.92 

5 

22.50 

2.59 

5 

25.00 

2.88 

6 

27.00 

3.63 

6 

30.00 

4.04 

7 

31.50 

4.84 

7 

35.00 

5.38 

8 

36.00 

6.22 

8 

40.00 

6.92 

9 

40.50 

7.78 

9 

45.00 

8.65 

10 

45.00 

9.54 

10 

50.00 

10.60 

11 

49.50 

11.43 

11 

55.00 

12.70 

12 

54.00 

13.50 

12 

60.00 

15.00 

13 

58.50 

15.75 

13 

65.00 

17.50 

14 

63.00 

18.18 

14 

70.00 

20.20 

15 

67.50 

20.79 

15 

75.00 

23.10 

16 

72.00 

23.58 

16 

80.00 

26.20 

17 

76.50 

26.46 

17 

85.00 

29.40 

18 

81.00 

29.61 

18 

90.00 

32.90 

19 

85.50 

32.85 

19 

95.00 

36.50 

20 

90.00 

36.36 

20 

100.00 

40.40 

21 

94.50 

39.96 

21 

105.00 

44.40 

22 

99.00 

43.74 

22 

110.00 

48.60 

23 

103.50 

47.79 

23 

115.00 

53.10 

24 

108.00 

51.93 

24 

120.00 

57.70 

25 

112.50 

56.25 

25 

125.00 

62.50 

26 

117.00 

60.75 

26 

130.00 

67.50 

[284] 


DISTRIBUTION  OF  EARNINGS. 


4  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

88 

.76 

75 

1.50 

2 

.04 

89 

•78 

76 

1.52 

8 

.06 

40 

.80 

77 

1.54 

4 

.08 

41 

.82 

78 

1.56 

5 

.10 

42 

.84 

79 

1.58 

6 

.12 

48 

.86 

80 

1.60 

7 

.14 

44 

.88 

81 

1.62 

8 

.16 

45 

.90 

82 

1.64 

9 

.18 

46 

.92 

88 

1.66 

10 

.20 

47 

.94 

84 

1.68 

11 

.22 

48 

.96 

85 

1.70 

12 

.24 

49 

.98 

86 

1.72 

18 

.26 

50 

1.00 

87 

1.74 

14 

.28 

51 

1.02 

88 

1.76 

15 

.80 

52 

1.04 

89 

1.78 

16 

.82 

58 

1.06 

90 

1.80 

17 

.34 

54 

1.08 

91 

1.82 

18 

.36 

55 

1.10 

92 

1.84 

19 

.88 

56 

1.12 

98 

1.86 

20 

.40 

57 

1.14 

94 

1.88 

21 

.42 

58 

1.16 

95 

1.90 

22 

.44 

59 

1.18 

96 

1.92 

28 

.46 

60 

1.20 

97 

1.94 

24 

.48 

61 

1.22 

98 

1.96 

25 

.50 

62 

1.24 

99 

1.98 

26 

.52 

68 

1.26 

27 

.54 

64 

1.28 

100 

2.00 

28 

.56 

65 

1.80 

200 

4.00 

29 

.58 

66 

1.32 

300 

6.00 

30 

.60 

67 

1.34 

400 

8.00 

81 

.62 

68 

1.36 

500 

10.00 

82 

.64 

69 

1.38 

600 

12.00 

88 

.66 

70 

1.40 

700 

14.00 

84 

.68 

71 

1.42 

800 

16.00 

85 

.70 

72 

1.44 

900 

18.00 

86 

.72 

78 

1.46 

1000 

20.00 

87 

.74 

74 

1.48 

Calculation  for  six  months. 
[285] 


CHAPTER  XXI. 


4%  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

38 

.81 

75 

1.59 

2 

.04 

39 

.83 

76 

1.61 

3 

.06 

40 

.85 

77 

1.64 

4 

.08 

41 

.87 

78 

1.66 

5 

.11 

42 

.89 

79 

1.68 

6 

.13 

43 

.91 

80 

1.70 

7 

.15 

44 

.93 

81 

1.72 

8 

.17 

45 

.96 

82 

1.74 

9 

.19 

46 

.98 

83 

1.76 

10 

.21 

47 

1.00 

84 

1.78 

11 

.23 

48 

1.02 

85 

1.81 

12 

.25 

49 

1.04 

86 

1.83 

13 

.28 

50 

1.06 

87 

1.85 

14 

.30 

51 

1.08 

88 

1.87 

15 

.32 

52 

1.10 

89 

1.89 

16 

.34 

53 

1.13 

90 

1.91 

17 

.36 

54 

1.15 

91 

1.98 

18 

.38 

55 

1.17 

92 

1.95 

19 

.40 

56 

1.19 

93 

1.98 

20 

.42 

57 

1.21 

94 

2.00 

21 

.45 

58 

1.23 

95 

2.02 

22 

.47 

59 

1.25 

96 

2.04 

23 

.49 

60 

1.27 

97 

2.06 

24 

.51 

61 

1.30 

98 

2.08 

25 

.53 

62 

1.32 

99 

2.10 

26 

.55 

63 

1.34 

27 

.57 

64 

1.36 

100 

2.12 

28 

.59 

65 

1.38 

200 

4.25 

29 

.62 

66 

1.40 

800 

6.37 

30 

.64 

67 

1.42 

400 

8.50 

31 

.66 

68 

1.44 

500 

10.62 

32 

.68 

69 

1.47 

600 

12.75 

33 

.70 

70 

1.49 

700 

14.87 

34 

.72 

71 

1.51 

800 

17.00 

35 

.74 

72 

1.53 

900 

19.12 

36 

.76 

78 

1.55 

1000 

21.25 

37 

.79 

74 

1.57 

Calculation  for  six  months, 
[286] 


DISTRIBUTION  OF  EARNINGS. 


4>^  per  cent  table. 


DoHars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

38 

.85 

75 

1.69 

2 

.04 

39 

.88 

76 

1.71 

3 

.07 

40 

.90 

77 

1.73 

4 

.09 

41 

.92 

78 

1.75 

5 

.11 

42 

.94 

79 

1.78 

6 

.18 

43 

.97 

80 

1.80 

7 

.16 

44 

.99 

81 

1.82 

8 

.18 

45 

1.01 

82 

1.84 

9 

.20 

46 

1.03 

83 

1.87 

10 

.22 

47 

1.06 

84 

1.89 

11 

.25 

48 

1.08 

85 

1.91 

12 

.27 

49 

1.10 

86 

1.93 

13 

.29 

50 

1.12 

87 

1.96 

14 

.31 

51 

1.15 

88 

1.98 

15 

.34 

52 

1.17 

89 

2.00 

16 

.36 

53 

1.19 

90 

2.02 

17 

.38 

54 

1.21 

91 

2.05 

18 

.40 

55 

1.24 

92 

2.07 

19 

.43 

56 

1.26 

93 

2.09 

20 

.45 

57 

1.28 

94 

2.11 

21 

.47 

58 

1.30 

95 

2.14 

22 

.49 

59 

1.33 

96 

2.16 

23 

.52 

60 

1.35 

97 

2.18 

24 

.54 

61 

1.37 

98 

2.20 

25 

.56 

62 

1.39 

99 

2.23 

26 

.58 

63 

1.42 

27 

.61 

64 

1.44 

100 

2.25 

28 

.63 

65 

1.46 

200 

4.50 

29 

.65 

66 

1.48 

300 

6.75 

30 

.67 

67 

1.51 

400 

9.00 

31 

.70 

68 

1.53 

500 

11.25 

32 

.72 

69 

1.55 

600 

13.50 

33 

.74 

70 

1.57 

700 

15.75 

34 

.76 

71 

1.60 

800 

18.00 

35 

.79 

72 

1.62 

900 

20.25 

36 

.81 

73 

1.64 

1000 

22.50 

37 

.83 

74 

1.66 

Calculation  for  six  months. 

[287] 


CHAPTER  XXL 


4}i  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

88 

.90 

75 

1.78 

2 

.05 

89 

.98 

76 

1.80 

8 

.07 

40 

.95 

77 

1.88 

4 

.09 

41 

.97 

78 

1.85 

6 

.12 

42 

1.00 

79 

1.88 

6 

.14 

48 

1.02 

80 

1.90 

7 

.17 

44 

1.04 

81 

1.92 

8 

.19 

45 

1.07 

82 

1.95 

9 

.21 

46 

1.09 

83 

1.97 

10 

.24 

47 

1.12 

84 

1.99 

11 

.26 

48 

1.14 

85 

2.02 

12 

.28 

49 

1.16 

86 

2.04 

13 

.81 

50 

1.19 

87 

2.07 

14 

.88 

51 

1.21 

88 

2.09 

16 

.86 

52 

1.28 

89 

2.11 

16 

.88 

58 

1.26 

90 

2.14 

17 

.40 

54 

1.28 

91 

2.16 

18 

.48 

55 

1.81 

92 

2.18 

19 

.45 

56 

1.38 

93 

2.21 

20 

.47 

57 

1.85 

94 

2.23 

21 

.50 

58 

1.38 

95 

2.26 

22 

.52 

59 

1.40 

96 

2.28 

28 

.55 

60 

1.42 

97 

2.30 

24 

.57 

61 

1.45 

98 

2.38 

25 

.59 

62 

1.47 

99 

2.85 

26 

.62 

68 

1.50 

27 

.64 

64 

1.52 

100 

2.37 

28 

.66 

65 

1.54 

200 

4.75 

29 

.69 

66 

1.57 

800 

7.12 

80 

.71 

67 

1.59 

400 

9.50 

81 

.74 

68 

1.61 

500 

11.87 

82 

.76 

69 

1.64 

600 

14.25 

88 

.78 

70 

1.66 

700 

16.62 

84 

.81 

71 

1.69 

800 

19.00 

85 

.88 

72 

1.71 

900 

21.87 

86 

.85 

78 

1.73 

1000 

28.75 

87 

.88 

74 

1.76 

Calculation  for  six  months. 

[288] 


DISTRIBUTION  OF  EARNINGS. 


6  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

38 

.95 

75 

1.87 

2 

.05 

39 

.97 

76 

1.90 

3 

.07 

40 

1.00 

77 

1.92 

4 

.10 

41 

1.02 

78 

1.95 

5 

.12 

42 

1.05 

79 

1.97 

6 

.15 

43 

1.07 

80 

2.00 

7 

.17 

44 

1.10 

81 

2.02 

8 

.20 

45 

1.12 

82 

2.05 

9 

.22 

46 

1.15 

83 

2.07 

10 

.25 

47 

1.17 

84 

2.10 

11 

.27 

48 

1.20 

85 

2.12 

12 

.30 

49 

1.22 

86 

2.15 

13 

.32 

50 

1.25 

87 

2.17 

14 

.35 

51 

J. 27 

88 

2.20 

15 

.37 

52 

1.30 

89 

2.22 

16 

.40 

53 

1.32 

90 

2.25 

17 

.42 

54 

1.35 

91 

2.27 

18 

.45 

55 

1.37 

92 

2.30 

19 

.47 

56 

1.40 

93 

2.32 

20 

.50 

57 

1.42 

94 

2.35 

21 

.52 

58 

1.45 

95 

2.37 

22 

.55 

59 

1.47 

96 

2.40 

23 

.57 

60 

1.50 

97 

2.42 

24 

.60 

61 

1.52 

98 

2.45 

25 

.62 

62 

1.55 

99 

2.47 

26 

.65 

63 

1.57 

27 

.67 

64 

1.60 

100 

2.50 

28 

.70 

65 

1.62 

200 

5.00 

29 

.72 

66 

1.65 

300 

7.50 

30 

.75 

67 

1.67 

400 

10.00 

31 

.77 

68 

1.70 

500 

12.50 

32 

.80 

69 

1.72 

600 

15.00 

33 

,82 

70 

1.75 

700 

17.50 

34 

.85 

71 

1.77 

800 

20,00 

35 

.87 

72 

1.80 

900 

22,50 

36 

.90 

73 

1.82 

1000 

25.00 

37 

.92 

74 

1.85 

Calculation  for  six  months. 
[2891 


CHAPTER  XXL 


6i  per  cent  table. 


Dollars. 

Interest 

Dollars. 

Interest. 

Dollars. 

Interest 

1 

.03 

38 

1.00 

75 

1.97 

2 

.05 

39 

1.02 

76 

1.99 

3 

.08 

40 

1.05 

77 

2.02 

4 

.10 

41 

1.08 

78 

2.05 

5 

.13 

42 

1.10 

79 

2.07 

6 

.16 

43 

1.13 

80 

2.10 

7 

.18 

44 

1.15 

81 

2.13 

8 

.21 

45 

1.18 

82 

2.15 

9 

.24 

46 

1.21 

83 

2.18 

10 

.26 

47 

1.23 

84 

2.20 

11 

.29 

48 

1.26 

85 

2.23 

12 

.31 

49 

1.29 

86 

2.26 

13 

.34 

50 

1.31 

87 

2.28 

14 

.37 

51 

1.34 

88 

2.31 

15 

.39 

52 

1.36 

89 

2.34 

16 

.42 

53 

1.39 

90 

2.36 

17 

.45 

54 

1.42 

91 

2.39 

18 

.47 

55 

1.44 

92 

2.41 

19 

.50 

56 

1.47 

93 

2.44 

20 

.52 

57 

1.50 

94 

2.47 

21 

.55 

58 

1.52 

95 

2.49 

22 

.58 

59 

1.55 

96 

2.52 

23 

.60 

60 

1.57 

97 

2.55 

24 

.63 

61 

1.60 

98 

2.57 

25 

.66 

62 

1.63 

99 

2.60 

26 

.68 

63 

1.65 

27 

.71 

64 

1.68 

100 

2.62 

28 

.73 

65 

1.71 

200 

5.25 

29 

.76 

66 

1.73 

300 

7.87 

30 

.79 

67 

1.76 

400 

10.50 

31 

.81 

68 

1.78 

500 

13.12 

32 

.84 

69 

1.81 

600 

15.75 

33 

.87 

70 

1.84 

700 

18.37 

34 

.89 

71 

1.86 

800 

21.00 

35 

.92 

72 

1.89 

900 

23.62 

36 

.94 

73 

1.92 

1000 

26.25 

37 

.97 

74 

1.94 

Calculation  for  six  months. 
[290] 


DISTRIBUTION  OF  EARNINGS. 


6^  per  cent  table. 


Dollars. 

Interest 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.04 

75 

2.06 

2 

.05 

39 

1.07 

76 

2.09 

3 

.08 

40 

1.10 

77 

2.12 

4 

.11 

41 

1.13 

78 

2.14 

5 

.14 

42 

1.15 

79 

2.17 

6 

.16 

43 

1.18 

80 

2.20 

7 

.19 

44 

1.21 

81 

2.23 

8 

.22 

45 

1.24 

82 

2.25 

9 

.25 

46 

1.26 

83 

2.28 

10 

.27 

47 

1.29 

84 

2.31 

11 

.30 

48 

1.32 

85 

2.34 

12 

.33 

49 

1.35 

86 

2.36 

13 

.36 

50 

1.37 

87 

2.39 

14 

.38 

51 

1.40 

88 

2.42 

15 

.41 

52 

1.43 

89 

2.45 

16 

.44 

53 

1.46 

90 

2.47 

17 

.47 

54 

1.48 

91 

2.50 

18 

.49 

55 

1.51 

92 

2.53 

19 

.52 

56 

1.54 

93 

2.56 

20 

.55 

57 

1.57 

94 

2.58 

21 

.58 

58 

1.59 

95 

2.61 

22 

.60 

59 

1.62 

96 

2.64 

23 

.63 

60 

1.65 

97 

2.67 

24 

.66 

61 

1.68 

98 

2.69 

25 

.69 

62 

1.70 

99 

2.72 

26 

.71 

63 

1.73 

27 

.74 

64 

1.76 

100 

2.75 

28 

.77 

65 

1.79 

200 

5.50 

29 

.80 

66 

1.81 

300 

8.25 

30 

.82 

67 

1.84 

400 

11.00 

31 

.85 

68 

1.87 

500 

13.75 

32 

.88 

69 

1.90 

600 

16.50 

33 

.91 

70 

1.92 

700 

19.25 

34 

.93 

71 

1.95 

800 

22.00 

35 

.96 

72 

1.98 

900 

24.75 

36 

.99 

73 

2.01 

1000 

27.50 

37 

1.02 

74 

2.03 

Calculation  for  six  months. 
[291] 


CHAPTER  XXL 


6f  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.09 

75 

2.16 

2 

.06 

39 

1.12 

76 

2.18 

3 

.09 

40 

1.15 

77 

2.21 

4 

.11 

41 

1.18 

78 

2.24 

5 

.14 

42 

1.21 

79 

2.27 

6 

.17 

43 

1.24 

80 

2.30 

7 

.20 

44 

1.26 

81 

2.33 

8 

.23 

45 

1.29 

82 

2.36 

9 

.26 

46 

1.32 

83 

2.39 

10 

.29 

47 

1.35 

84 

2.41 

11 

.32 

48 

1.58 

85 

2.44 

12 

.34 

49 

1.41 

86 

2.47 

13 

.37 

50 

1.44 

87 

2.50 

14 

.40 

51 

1.47 

88 

2.53 

15 

,43 

52 

1.49 

89 

2.56 

16 

.46 

53 

1.52 

90 

2.59 

17 

.49 

54 

1.55 

91 

2.62 

18 

.52 

55 

1.58 

92 

2.64 

19 

.55 

56 

1.61 

93 

2.67 

20 

.57 

57 

1.64 

94 

2.70 

21 

.60 

58 

1.67 

95 

2.73 

22 

.63 

59 

1.70 

96 

2.76 

23 

.66 

60 

1.72 

97 

2.79 

24 

.69 

61 

1.75 

98 

2.82 

25 

.72 

62 

1.78 

99 

2.85 

26 

,75 

63 

1.81 

27 

.78 

64 

1.84 

100 

2.87 

28 

.80 

65 

1.87 

200 

5.75 

29 

.83 

66 

1.90 

300 

8.62 

30 

.86 

67 

1.93 

400 

11.50 

31 

.89 

68 

1.95 

500 

14.37 

32 

.92 

69 

1.98 

600 

17.25 

33 

.95 

70 

2.01 

700 

20.12 

34 

.98 

71 

2.04 

800 

23.00 

35 

1.01 

72 

2.07 

900 

25.87 

36 

1.03 

73 

2.10 

1000 

28.75 

37 

1.06 

74 

2.13 

Calculation  for  six  months. 
[292] 


DISTRIBUTION  OF  EARNINGS. 


6  per  cent  table. 


Dollars. 

interest. 

Dollars. 

Interest 

DoKars. 

interest 

1 

.03 

38 

1.14 

75 

2.25 

2 

.06 

39 

1.17 

76 

2.28 

3 

.09 

40 

1.20 

77 

2.31 

4 

.12 

41 

1.23 

78 

2.34 

5 

.15 

42 

1.26 

79 

2.37 

6 

.18 

43 

1.29 

80 

2.40 

7 

,21 

44 

1.32 

81 

2.43 

8 

.24 

45 

1.35 

82 

2.46 

9 

.27 

46 

1.38 

83 

2.49 

10 

.30 

47 

1.41 

84 

2.52 

11 

.33 

48 

1.44 

85 

2.55 

12 

.36 

49 

1.47 

86 

2.58 

13 

.39 

50 

1.50 

87 

2.61 

14 

.42 

51 

1.53 

88 

2.64 

15 

.45 

52 

1.56 

89 

2.67 

16 

.48 

53 

1.59 

90 

2.70 

17 

.51 

54 

1.62 

91 

2.73 

18 

.54 

55 

1.65 

92 

2.76 

19 

.57 

56 

1.68 

93 

2.79 

20 

.60 

57 

1.71 

94 

2.82 

21 

.63 

58 

1.74 

95 

2.85 

22 

.66 

59 

1.77 

96 

2.88 

23 

.69 

60 

1.80 

97 

2.91 

24 

.72 

61 

1.83 

98 

2.94 

25 

.75 

62 

1.86 

99 

2.97 

26 

.78 

63 

1.89 

27 

.81 

64 

1.92 

100 

3.00 

28 

.84 

65 

1.95 

200 

6.00 

29 

.87 

66 

1.98 

300 

9.00 

30 

.90 

67 

2.01 

400 

12.00 

31 

.93 

68 

2.04 

500 

15.00 

32 

.96 

69 

2.07 

600 

18.00 

33 

.99 

70 

2.10 

700 

21.00 

34 

1.02 

71 

2.13 

800 

24.00 

35 

1.05 

72 

2.16 

900 

27.00 

36 

1.08 

73 

2.19 

1000 

30.00 

37 

1.11 

74 

2.22 

Cal 

culation  for  six  mor 

ths. 

[2i 

m 

CHAPTER  XXL 


6i  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.19 

75 

2.34 

2 

.06 

39 

1.22 

76 

2.37 

3 

.09 

40 

1.25 

77 

2.41 

4 

.12 

41 

1.28 

78 

2.44 

5 

.16 

42 

1.31 

79 

2.47 

6 

.19 

43 

1.34 

80 

2.50 

7 

.22 

44 

1.37 

81 

2.53 

8 

.25 

45 

1.41 

82 

2.56 

9 

.28 

46 

1.44 

83 

2.59 

10 

.31 

47 

1.47 

84 

2.62 

11 

.34 

48 

1.50 

85 

2.66 

12 

.37 

49 

1.53 

86 

2.69 

13 

.41 

50 

1.56 

87 

2.72 

14 

.44 

51 

1.59 

88 

2.75 

15 

.47 

52 

1.62 

89 

2.78 

16 

.50 

53 

1.66 

90 

2.81 

17 

.53 

54 

1.69 

91 

2.84 

18 

.56 

55 

1.72 

92 

2.87 

19 

.59 

56 

1.75 

93 

2.91 

20 

.62 

57 

1.78 

94 

2.94 

21 

.66 

58 

1.81 

95 

2.97 

22 

.69 

59 

1.84 

96 

3.00 

23 

.72 

60 

1.87 

97 

2.03 

24 

.75 

61 

1.91 

98 

3.06 

25 

.78 

62 

1.94 

99 

3.09 

26 

.81 

63 

1.97 

27 

.84 

64 

2.00 

100 

3.12 

28 

.87 

65 

2.03 

200 

6.25 

29 

.91 

66 

2.06 

300 

9.37 

30 

.94 

67 

2.09 

400 

12.50 

31 

.97 

68 

2.12 

500 

15.62 

32 

1.00 

69 

2.16 

600 

18.75 

33 

1.03 

70 

2.19 

700 

21.87 

34 

1.06 

71 

2.22 

800 

25.00 

35 

1.09 

72 

2.25 

900 

28.12 

36 

1.12 

73 

2.28 

1000 

31.25 

37 

1.16 

74 

2.31 

Calculation  for  six  months. 
[294] 


DISTRIBUTION  OF  EARNINGS. 


Br:  per  cent  table. 


Ottlldt. 

Interest. 

Dcllars. 

Interest. 

Dollars. 

1     )ntere:^ 

1 

.03 

38 

1.23 

75 

a.4^ 

2 

.06 

39 

1.27 

76 

2.4? 

3 

.10 

40 

1.30 

77 

2.5i' 

4 

.13 

41 

1.33 

78 

2.53 

5 

.16 

42 

1.36 

79 

2.57 

6 

.19 

43 

1.40 

80 

2.60 

7 

.23 

44 

1.43 

81 

2.63 

8 

.26 

45 

1.46 

82 

2.66 

9 

.29 

46 

1.49 

83 

2.70 

10 

.32 

47 

1.53 

84 

2.73 

11 

.36 

48 

1.56 

85 

2.76 

12 

.39 

I         49 

1.59 

86 

2.79 

13 

.42 

50 

1.62 

87 

2.83 

14 

.45 

51 

1.66 

88 

2.86 

15 

.49 

52 

1.69 

89 

2.89 

16 

.52 

53 

1.72 

90 

2.92 

17 

.55 

54 

1.75 

91 

2.96 

18 

.58 

55 

1.79 

92 

2.99 

19 

.62 

56 

1.82 

93 

a.02 

20 

.65 

57 

1.85 

94 

3.05 

21 

.68 

58 

1.88 

95 

3.09 

22 

.71 

59 

1.92 

96 

3.12 

23 

.75 

60 

1.95 

97 

3.15 

24 

.78 

61 

1.98 

98 

3.18 

25 

.81 

62 

2.01 

99 

3.22 

26 

.84 

63 

2.05 

27 

.88 

64 

2.08 

100 

3.25 

28 

.91 

65 

2.11 

200 

6.50 

29 

.94 

66 

2.14 

300 

9.75 

30 

.97 

67 

2.18 

400 

13.00 

31 

1.01 

68 

2.21  1 

500 

16.25 

32 

1.04 

69 

2.24 

600 

19.50 

33 

1.07 

70 

2.27  1 

700 

22.75 

34 

1.10 

71 

2.31 

800 

26.00 

35 

1.14 

72 

2.34 

900 

29.25 

36 

1.17 

73 

2.37 

1000 

32.50 

37 

1.20 

74 

2.40 

Calculation  for  six  months. 
[295] 


CHAPTER  XXL 


6f  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.28 

75 

2.53 

2 

.07 

39 

1.32 

76 

2.56 

3 

.10 

40 

1.35 

77 

2.60 

4 

.13 

41 

1.38 

78 

2.63 

5 

.17 

42 

1.42 

79 

2.67 

6 

.20 

43 

1.45 

80 

2.70 

7 

.24 

44 

1.48 

81 

2.73 

8 

.27 

45 

1.52 

82 

2.77 

9 

,30 

46 

1.55 

83 

2.80 

10 

.34 

47 

1.59 

84 

2.83 

11 

.37 

48 

1.62 

85 

2.87 

12 

.40 

49 

1.65 

86 

2.90 

13 

.44 

50 

1.69 

87 

2.94 

14 

.47 

51 

1.72 

88 

2.97 

15 

.51 

52 

1.75 

89 

3.00 

16 

.54 

53 

1.79 

90 

3.04 

17 

.57 

54 

1.82 

91 

3.07 

18 

.61 

55 

1.86 

92 

3.10 

19 

.64 

56 

1.89 

93 

3.14 

20 

.67 

57 

1.92 

94 

3.17 

21 

.71 

58 

1.96 

95 

3.21 

22 

.74 

59 

1.99 

96 

3.24 

23 

.78 

60 

2.02 

97 

3.27 

24 

.81 

61 

2.06 

98 

3.31 

25 

.84 

62 

2.09 

99 

3.34 

26 

.88 

63 

2.13 

1 

27 

.91 

64 

2.16 

100 

3.37 

28 

.94 

65 

2.19 

200 

6.75 

29 

.98 

66 

2.23 

300 

10.12 

30 

1.01 

67 

2.26 

400 

13.50 

31 

1.05 

68 

2.29 

500 

16.87 

32 

1.08 

69 

2.33 

600 

20.25 

33 

1.11 

70 

2.36 

700 

23.62 

34 

1.15 

71 

2.40 

800 

27.00 

35 

1.18 

72 

2.43 

900 

30.37 

36 

1.21 

73 

2.46 

1000 

33.75 

37 

1.25 

74 

2.50 

Calculation  for  six  months. 
[296] 


DISTRIBUTION  OF  EARNINGS. 


7  per  cent  table. 


Dollars. 

interest. 

Dollars. 

Interest. 

Dollars. 

Interest 

1 

.03 

38 

1.33 

75 

2.62 

2 

.07 

39 

1.36 

76 

2.66 

•     3 

.10 

1         40 

1.40 

77 

2.69 

4 

.14 

i         41 

1.43 

78 

2.73 

5 

.17 

42 

1.47 

79 

2.76 

6 

.21 

43 

1.50 

80 

2.80 

7 

.24 

44 

1.54 

81 

2.83 

8 

.28 

45 

1.57 

82 

2.87 

9 

.31 

46 

1.61 

83 

2.90 

10 

.35 

47 

1.64 

84 

2.94 

11 

.38 

48 

1.68 

85 

2.97 

12 

.42 

49 

1.71 

86 

3.01 

13 

.45 

50 

1.75 

87 

3.04 

14 

.49 

51 

1.78 

88 

3.08 

15 

.52 

52 

1.82 

89 

3.11 

16 

.56 

53 

1.85 

90 

3.15 

17 

.59 

54 

1.89 

91 

3.18 

18 

.63 

55 

1.92 

92 

3.22 

19 

.66 

56 

1.96 

93 

3.25 

20 

.70 

57 

1.99 

94 

3.29 

21 

.73 

58 

2.03 

95 

3.32 

22 

.77 

59 

2.06 

96 

3.36 

23 

.80 

60 

2.10 

97 

3.39 

24 

.84 

61 

2.13 

98 

3.43 

25 

.87 

62 

2.17 

99 

3.46 

26 

.91 

63 

2.20 

27 

.94 

64 

2.24 

100 

3.50 

28 

.98 

65 

2.27 

200 

7.00 

29 

1.01 

66 

2.31 

300 

10.50 

30 

1.05 

67 

2.34 

400 

14.00 

31 

1.08 

68 

2.38 

500 

17.50 

32 

1.12 

69 

2.41 

600 

21.00 

33 

1.15 

70 

2.45 

700 

24.50 

34 

1.19 

71 

2.48 

800 

28.00 

35 

1.22 

72 

2.52 

900 

31.50 

36 

1.26 

73 

2.55 

1000 

35.00 

37 

1.29 

74 

2.59 

Calculation  for  six  months. 
[297] 


CHAPTER  XXL 


7i  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.04 

38 

1.38 

75 

2.72 

2 

.07 

39 

1.41 

76 

2.75 

3 

.11 

40 

1.45 

77 

2.79 

4 

.14 

41 

1.49 

78 

2.83 

5 

.18 

42 

1.52 

79 

2.86 

6 

.22 

43 

1.56 

80 

2.90 

7 

.25 

44 

1.59 

81 

2.94 

8 

.29 

45 

1.63 

82 

2.97 

9 

.33 

46 

1,67 

83 

3.01 

10 

.36 

47 

1.70 

84 

3.04 

11 

.40 

48 

1.74 

85 

3.08 

12 

.43 

49 

1.78 

86 

3.12 

13 

.47 

50 

1.81 

87 

3.15 

14 

.51 

51 

1.85 

88 

3.19 

15 

.54 

52 

1.88 

89 

3.23 

16 

.58 

53 

1.92 

90 

3.26 

17 

.62 

54 

1.96 

91 

3.30 

18 

.65 

55 

1.99 

92 

3.33 

19 

.69 

56 

2.03 

93 

3.37 

20 

.72 

57 

2.07 

94 

3.41 

21 

.76 

58 

2.10 

95 

3.44 

22 

.80 

59 

2.14 

96 

3.48 

23 

.83 

60 

2.17 

97 

3.52 

24 

.87 

61 

2.21 

98 

3.55 

25 

.91 

62 

2.25 

99 

3.59 

26 

.94 

63 

2.28 

27 

.98 

64 

2.32 

100 

3.62 

28 

1.01 

65 

2.36 

200 

7.25 

29 

1.05 

66 

2.39 

300 

10.87 

30 

1.09 

67 

2.43 

400 

14.50 

31 

1.12 

68 

2.46 

500 

18.12 

32 

1.16 

69 

2.50 

600 

21.75 

33 

1.20 

70 

2.54 

700 

25.37 

34 

1.23 

71 

2.57 

800 

29.00 

35 

1.27 

72 

2.61 

900 

32.62 

36 

1.30 

73 

2.65 

1000 

36.25 

37 

1.34 

74 

2.68 

Calculation  for  six  months. 

[298] 


DISTRIBUTION  OF  EARNINGS. 


7^  per  cent  table. 


Dollars. 

interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.04 

38 

1.42 

75 

2.81 

2 

.07 

39 

1.46 

76 

2.85 

3 

.11 

40 

1.50 

77 

2.89 

4 

.15 

41 

1.54 

78 

2.92 

5 

.19 

42 

1.57 

79 

2.96 

6 

.22 

43 

1.61 

80 

3.00 

7 

.26 

44 

1.65 

81 

3.04 

8 

.30 

45 

1.69 

82 

3.07 

9 

.34 

46 

1.72 

83 

3.11 

io 

.37 

47 

1.76 

84 

3.15 

n 

.41 

48 

1.80 

85 

3.19 

12 

.45 

49 

1.84 

86 

3.22 

13 

.49 

50 

1.87 

87 

3.26 

14 

.52 

51 

1.91 

88 

3.30 

15 

.56 

52 

1.95 

89 

3.34 

16 

.60 

53 

1.99 

90 

3.37 

17 

.64 

54 

2.02 

91 

3.41 

18 

.ey 

55 

2.06 

92 

3.45 

19 

.71 

56 

2.10 

93 

3.49 

20 

.75 

57 

2.14 

94 

3.52 

21 

.79 

58 

2.17. 

95 

3.56 

22 

.82 

59 

2.21 

96 

3.60 

23 

.86 

60 

2.25 

97 

3.64 

24 

,90 

61 

2.29 

98 

3.67 

25 

.94 

62 

2.32 

99 

3.71 

26 

.97 

63 

2.36 

27 

1.01 

64 

2.40 

100 

3.75 

28 

1.05 

65 

2.44 

200 

7.50 

29 

1.09 

66 

2.47 

300 

11.25 

30 

1.12 

67 

2.51 

400 

15.00 

31 

1.16 

68 

2.55 

500 

18.75 

32 

1.20 

69 

2.59 

600 

22.50 

33 

1.24 

70 

2.62 

700 

26.25 

34 

1.27 

71 

2.66 

800 

30.00 

35 

1.31 

72 

2.70 

900 

33.75 

36 

1.35 

73 

2.74 

tOOO 

37.50 

37 

1.39 

74 

2.77 

Calailation  for  six  months. 
[2991 


CHAPTER  XXL 


7|  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.04 

38 

1.47 

75 

2,91 

2 

.08 

39 

1.51 

76 

2.94 

3 

.12 

40 

1.55 

77 

2.98 

4 

.15 

41 

1.59 

78 

3.02 

5 

.19 

42 

1.63 

79 

3.06 

6 

.23 

43 

1.67 

80 

3.10 

7 

.27 

44 

1.70 

81 

3.14 

8 

.31 

45 

1.74 

82 

3.18 

9 

.35 

46 

1.78 

83 

3.22 

10 

.39 

47 

1.82 

84 

3.25 

11 

.43 

48 

1.86 

85 

3.29 

13 

.46 

49 

1.90 

86 

3.33 

13 

.50 

50 

1.94 

87 

3.37 

14 

.54 

51 

1.98 

88 

3.41 

15 

.58 

52 

2.01 

89 

3.45 

16 

.62 

53 

2.05 

90 

3.49 

17 

.66 

54 

2.09 

91 

3.53 

18 

.70 

55 

2.13 

92 

3.56 

19 

.74 

56 

2.17 

93 

3.60 

20 

.77 

57 

2.21 

94 

3.64 

21 

.81 

58 

2.25 

95 

3.68 

22 

.85 

59 

2.29 

96 

3.72 

23 

.89 

60 

2.32 

97 

3.76 

24 

.93 

61 

2.36 

98 

3.80 

25 

.97 

62 

2.40 

99 

3.84 

26 

1.01 

63 

2.44 

27 

1.05 

64 

2.48 

100 

3.87 

28 

1.08 

65 

2.52 

200 

7.75 

29 

1.12 

66 

2.56 

300 

11.62 

30 

1.16 

67 

2.60 

400 

15.50 

31 

1.20 

68 

2.63 

500 

19.37 

32 

1.24 

69 

2.67 

600 

23.25 

^3 

1.28 

70 

2.71 

700 

27.12 

3'd: 

1.32 

71 

2.75 

800 

31.00 

35 

1.36 

72 

2.79 

900 

34.87 

36 

1.39 

73 

2.83 

1000 

38.75 

37 

1.43 

74 

2.87 

Calculation  for  six  months. 
[300] 


DISTRIBUTION  OF  EARNINGS. 


8  per  cent  table. 


Dollars. 

interest 

Dollars. 

Interest 

Dollars. 

Interest 

1 

.04 

38 

1.52 

75 

3.00 

2 

.08 

39 

1.56 

76 

3.04 

3 

.12 

40 

1.60 

77 

3.08 

4 

.16 

41 

1.64 

78 

3.12 

6 

.20 

42 

1.68 

79 

3.16 

6 

.24 

43 

1.72 

80 

3.20 

7 

.28 

44 

1.76 

81 

3.24 

8 

.32 

45 

1.80 

82 

3.28 

9 

.36 

46 

1.84 

83 

3.32 

10 

.40 

47 

1.88 

84 

3.36 

11 

,44 

48 

1.92 

85 

3.40 

12 

.48 

49 

1.96 

86 

3.44 

13 

.52 

50 

2.00 

87 

3.48 

14 

.56 

51 

2.04 

88 

3.52 

15 

.60 

52 

2.08 

89 

3.56 

16 

.64 

53 

2.12 

90 

3.60 

17 

.68 

54 

2.16 

91 

3.64 

18 

.72 

55 

2.20 

92 

3.68 

19 

.76 

56 

2.24 

93 

3.72 

20 

.80 

57 

2.28 

94 

3.76 

21 

.84 

58 

2.32 

95 

3.80 

22 

.88 

59 

2.36 

96 

3.84 

23 

.92 

60 

2.40 

97 

3.88 

24 

.96 

61 

2.44 

98 

3.92 

25 

1.00 

62 

2.48 

99 

3.96 

26 

1.04 

63 

2.52 

27 

1.08 

64 

2.56 

100 

4.00 

28 

1.12 

65 

2.60 

200 

8.00 

29 

1.16 

66 

2.64 

300 

12.00 

30 

1.20 

67 

2.68 

400 

16.00 

31 

1.24 

68 

2.72 

500 

20.00 

32 

1.28 

69 

2.76 

600 

24.00 

33 

1.32 

70 

2.80 

700 

28.00 

34 

1.36 

71 

2.84 

800 

32.00 

35 

1.40 

72 

2.88 

900 

36.00 

36 

1.44 

73 

2.92 

1000 

40.00 

37 

1.48 

74 

2.96 

Calculation  for  six  months. 
[301] 


CHAPTER  XXII. 


Distribution  of  Earnings — Serial  Plan. 


There  are  a  number  of  plans  in  operation  for  the 
distribution  of  profits.  The  amount  of  interest  which  a 
member  has  in  a  building,  loan  and  savings  association 
is  indicated  by  the  number  of  shares  which  are  held,  the 
age  of  the  shares  and  the  maturing  value.  Shares  are 
divided  into  various  classes,  installment  or  running  shares, 
prepaid  shares  and  paid-up  shares.  A  member  who  makes 
weekly,  monthly  or  other  periodical  subscriptions  for 
installment  shares  indicates  the  amount  of  periodical  pay- 
ments he  desires  to  make  by  the  number  of  shares  for 
which  he  subscribes.  Those  payments  are  continued  until 
the  installments  and  the  profits  on  the  shares  have  caused 
them  to  reach  their  maturing  or  par  value,  when  they  are 
wound  up  by  returning  to  the  non-borrowing  members 
the  value  of  their  shares  in  cash,  and  to  the  borrowing 
members  their  mortgages  and  canceled  obligations. 
Prepaid  shares,  known  as  partly  paid  up  shares,  are  issued 
by  some  associations  at  a  fixed  price  per  share  in  advance. 
Such  shares  usually  participate  as  fully  in  the  profits  as 
the  regular  installment  shares,  and  when  the  amount 
originally  paid  in  for  such  shares,  together  with  the 
dividends  credited  thereon,  reaches  the  maturing  or  par 

[302] 


DISTRIBUTION  OF  EARNINGS. 

value,  then  such  shares  are  matured,  and  are  disposed  of 
in  the  same  manner  as  regular  installment  shares.  Some 
associations,  instead  of  crediting  all  the  profits  made  on 
this  class  of  shares,  allow  a  fixed  rate  of  interest  on  the 
amount  paid  therefor  at  each  dividend  period,  which  is 
paid  in  cash  to  the  holder  thereof.  The  interest  is  then 
deducted  from  the  profits  to  which  the  shares  are  entitled,^ 
and  the  balance  is  credited  to  the  shares,  until  such  unpaid 
portion  of  the  profits,  added  to  the  amount  originally 
paid,  equals  the  maturing  or  par  value. 

DIVISION  OF  PROFITS— SERIAL  PLAN.* 

The  purpose  of  the  following  calculations  is  to  show 
different  methods  of  dividing  ascertained  gains  between 
series,  and,  of  course,  between  the  shares  of  a  series. 

The  several  columns  represent: 
Column  A.— Payments  at  the  beginning  of  each  month  beginning 

with  $1.00  and  continuing  until  $144.00  have  been  paid  in. 
Column  B. — These  figures  represent  1  per  cent  per  annum  on  the 

dues — payments,  namely,  for  the  average  time  the  money  is  in- 
vested. 
Column  C. — Average  investment  one  share  for  one  full  month. 
Column  D. — This  column  of  earning  powers  is  arranged   for  the 

convenience  of  societies  issuing  shares  every  three  months. 

The  proper  use  of  Columns  B,  C  and  D  as  earning  powers  will 

produce  like  results. 
All  the  above  based  on  the  exact  average  time  the  money  has 

been  invested. 
Column  E. — This  column  is  for  societies  issuing  yearly  series,  and 

while  the  figures  do  not  represent  the  exact  time  of  investment, 

the  use  of  them  results  in  a  short  cut  to  the  desired  end. 
Column  F. — This  column  is  like  Column  E,  but  may  be  used  for 

societies  issuing  shares  every  6  months. 

The  figures  have  been  compiled  for  the  use  of  secretaries  who 


*  Prepared  by  Michael  J.  Brown,  Philadelphia,  Pa. 

[303] 


CHAPTER  XXII. 

may  desire  to  use  any  one  of  the  several  means  of  ascertaining  pro- 
portional gains. 

The  rule  is  to  multiply  the  number  of  shares  in  each  series  by 
the  number  given  in  any  one  of  the  tables,  B,  C,  D,  E  or  F,  for  that 
series,  using  the  sum  of  these  as  the  divisor  into  the  known  total 
gain  of  the  society.  The  total  gain  is  obtained  by  subtracting  the 
liabilities  from  the  assets— dues  paid  being  treated  as  a  liability. 
This  will  give  the  multipliers,  6  in  the  first  example;  .005  in  the 
second ;  .03  in  the  third ;  .3737  in  the  fourth,  and  .0934  in  the  fifth. 

The  one  per  centum  for  each  series  in  Column  B,  or  the  average 
investments  in  Column  C,  or  the  earning  powers  in  Columns  D,  E 
or  F,  are  then  to  be  multiplied  by  the  number  thus  ascertained,  to  get 
the  division  of  gain  to  the  series.  The  division  to  each  share  is  ob- 
tained by  dividing  the  total  gain  of  the  series  by  the  total  number  of 
shares. 

The  figures  given  are  based  on  actual  time,  namely: 

$48  for  24^  months  =  $1,176  for  one  month.  Interest  at  six 
per  cent  on  $1,176  for  one  month  =  $5.88,  or,  at  one  per  cent,  one- 
sixth  of  that  amount— .98  as  given  in  the  table— see  Column  A  and 
B,  $48. 

The  examples  that  follow  assume  that  the  total  gain  of  the  so- 
ciety under  the  conditions  named  is  $179.40.  This  may  be  divided  to 
the  series  and  the  shares  by  any  one  of  the  tables  B,  C,  D,  E  or  F. 

By  the  first  three  methods  the  division  will  be  exact,  and  all  will, 
of  course,  agree,  one  with  another.  By  E  and  F  the  division  is  only 
approximately  correct,  and,  therefore,  these  divisions  do  not  agree 
exactly  with  those  made  by  tables  B,  C  and  D.  E  and  F  are  pre- 
ferred by  some  secretaries  because  they  simplify  the  operation. 

Keeping  in  mind  the  directions  above  given  here  are  examples  of 
the  processes : 

EXAMPLE  COLUMNS  A  AND  B. 

One  Per 

Payments  Shares  Centum 

$36.00  30  X  .555  =  $16.65  X  6  r:r  $99  90 

24.00  40  X  .250  =  10.00  X  6  =  60.00 

12.00    50  X  .065  =      3.25X6=     19.50 

$29.90  $179.40 

Gain— $179.40  -f-  29.90  =  6. 

Gain  Gain 

per  Series     Shares    per  Share 

$99.90  -^  30  =  $3.33 

60.00  -^  40  —    1.50 

19.50  -^  50  =r   .39 

[304] 


DISTRIBUTION  OF  EARNINGS. 


EXAMPLE  COLUMNS  A  AND  C. 
Average 

Payments  Shares     1  Mon-th 

$36.00    30  X  $666  =  $19,980  X  .005  =  $99.90 

24.00    40  X    300  =    12.000  X  .005  =    60.00 

12.00    50  X      78  =      3.900  X  .005  =    19.50 

$35,880  $179.40 

Gain— $179.40  -4-  :^5.880  =  .005 

Division  to  Shares  as  above. 

EXAMPLE  COLUMNS  A  AND  D. 

Payments  Powers     Shares 

$36.00    Ill  X  30  =  $3,330  X  .03  =  $99.90 

24.00    50  X  40  =    2,000  X  .03  =    60.00 

12.00    13  X  50  =       650  X  .03  =    19.60 

$5,980  $179.40 

Gain— $179.40  -h-  5,980  =  .03 
Division  to  Shares  as  above. 

EXAMPLE  COLUMNS  A  AND  E. 
Fractional  Parts  of  Month  Omitted. 

Payments  Powers     Shares     Total 

$36.00    9  X  30  =  $270  X  .3737  =  $100.90 

24.00    4X40=    160  X  .3737  =      59.79 

12.00    IX  50=      50X  .3737  =      18.69 

$480  $179.38 

Gain— $179.40  -^  480  =  .3737 

Gain  Gain 

per  Series     Shares    per  Share 

$100.90  -f-  30  =  $3.36 
59.70  -^  40  =  1.49 
18.69  ^  ,50  =      .37  37 

EXAMPLE  COLUMNS  A  AND  F. 

Payments  Powers     Shares 

$36.00    36  X  30  =  $1,080  X  .0934  =  $100.90 

24.00    16  X  40  =       640  X  .0934  =      59.79 

12.00    4  X  50  =       200  X  .0934  =      18.69 

$1,920  $179.38 

Gain— $179.40  -4-  1,920  =  .0934 


Gain  Gain 

per  Series     Shares    per  Share 

$100.90  -^  30  =  $3.36 
59.70  -f-  40  =  1.49 
18.69  -4-  50  =      .37  37 

[305] 


CHAPTER  XXII. 


EARNING  POWERS. 


Payments 

A 

$144 
143 
142 

141 
140 

ia9 

i38 

137 

136 

135 

134 

133 

132 

131 

130 

129 

128 

127 

126 

125 

124 

123 

122 

121 

120 

119 

118 

117 

116 

115 

114 

113 

112 

111 

110 

109 

108 

107 

106 

105 

104 

103 

102 

101 

100 

99 

98 


One  per  Cent 
per  Annum 

B 

$8.70000 
8.58000 
8.46083 
8.34250 
8.2250O 
8.10833 
7.99250 
7.87750 
7.76333 
7.65000 
7.53750 
7.42583 
7.31500 
7.20500 
7.09583 
6.98750 
6.88000 
6.77333 
•   6.66750 
6.56250 
6.45833 
6.35500 
6.25250 
6.15083 
6.05000 
5.95000 
5.85083 
5.76250 
5.65500 
5.55833 
5.46250 
5.36750 
5.27333 
5.18000 
5.08750 
4.99582 
4.90500 
4.81500 
4.72583 
4.63750 
4.55000 
4.46333 
4.37750 
4.29250 
4.21250 
4.12500 
4.04250 


Average  Investment 
for  One  Month 


$10,440 
10,296 
10,153 
10,011 

9,870 

9,730 

9,591 

9,453 

9,316 

9,180 

9,045 

8,911 

8,778 

8,646 

8,515 

8,385 

8,256 

8,128 

8,001 

7,875 

7,750 

7,626 

7,503 

7,381 

7,260 

7.140 

7,021 

6,903 

6,786 

6,670 

6,555 

6,441 

6,328 

6,216 

6,106 

5,995 

5,886 

5,778 

5,671 

5,565 

5,460 

5356 

5,253 

5,151 

5,050 

4,950 

4,851 
[306] 


Calculated  Powers 

D        E 


1740 

1716 

168854 

16681/4 

1645 

1625 

15985^ 


1530 
1463 

1397^ 

1333^ 

1271 

1210 

11501/4 

1092H 

1036 

981 

927^ 

875J4 

825 


144 


121 


100 


F 
576 


559 


484 


441 


400 


361 


81 


DISTRIBUTION  OF  EARNINGS. 


One  per  Cent. 

Average  Investment 

Payments 

per  Annum 

for  One  Month 

A 

B 

c 

97 

3.96083 

4,753 

06 

3.88000 

4,656 

9,5 

3.80000 

4,560 

94 

3.72083 

4.465 

93 

3.64250 

4,371 

92 

3.56500 

4,278 

91 

3.48833 

4,186 

90 

3.41250 

4,095 

89 

3.33750 

4.005 

88 

3.26333 

3,916 

87 

3.19000 

3,828 

86 

3.11750 

3,741 

m 

3.04583 

3,655 

84 

2.97500 

3.570 

83 

2.90500 

3,486 

82 

•2.8.3-583 

3,403 

81 

2.76750 

3,321 

80 

2.70000 

3,240 

79 

2.63333 

3,160 

78 

2.56750 

3,081 

77 

2.50250 

3,003 

76 

2.43833 

2,926 

75 

2.37500 

2,850 

74 

2.31250 

2,775 

73 

2.25083 

2,701 

72 

2.19000 

2,628 

71 

2.13000 

2,556 

70 

2.07083 

2,485 

69 

2.01250 

2,415 

68 

1.95500 

2,346 

67 

1.89833 

2,278 

66 

1.84250 

2,211 

65 

1.78750 

2,145 

64 

1.7^333 

2,080 

63 

1.68000 

2,016 

62 

1.62750 

1,953 

61 

1.57583 

1,891 

60 

1.5250O 

1,830 

59 

1.47500 

1,770 

58 

1.42583 

1.711 

57 

1.37750 

1,653 

56 

1.33000 

1,506 

55 

1.28333 

1,540 

54 

1.23750 

1.485 

53 

1.19250 

1,431 

62 

1.14833 

1,378 

51 

1.1050O 

1.326 

50 

1.06333 

1,276 

49 

1.02083 

1,225 

[307] 

Calculated  Powers 

D        E       F 
776       64      256 

72854 

682J4  225 

638 

595       49       196 

553}^ 

513^  169 

475 

438       36       144 

402/2 

36854  121 

336 

305       25       100 

275K 

247J4  81 


CHAPTER  XXIL 


One  per  Cent 

Average  Investment 
for  One  Month 

/^nlrm'-i- J  T> 

Payments 

per  Annvim 

ifiicu  X  uwv-ia 

A 

B 

c 

D 

E       F 

48 

.98000 

1,176 

196 

16       6^ 

47 

.94000 

1,128 

46 

.90083 

1,081 

45 

.86250 

1,035 

172/2 

44 

.82500 

990 

43 

.78833 

946 

42 

.75250 

903 

150^ 

4! 

41 

.71750 

861 

40 

.68333 

820 

39 

.65000 

780 

130 

38 

.61750 

741 

37 

.58583 

703 

36 

.55500 

666 

111 

9       3 

35 

.52500 

630 

34 

.49583 

595 

33 

.46750 

561 

93/2 

32 

.44000 

528 

31 

.41333 

496 

30 

.38750 

465 

77/ 

2 

29 

.36250 

435 

28 

.33833 

406 

27 

.31500 

378 

63 

26 

.29250 

351 

25 

.27083 

325 

24 

.25000 

300 

50 

4       1 

23 

.23000 

276 

22 

.21083 

253 

21 

.19250 

231 

38/ 

20 

.17500 

210 

19 

.15833 

190 

18 

.14250 

171 

28/ 

17 

.12750 

153 

16 

.11333 

136 

15 

.10000 

120 

20 

14 

.08750 

105 

13 

.07583 

91 

12 

.06500 

78 

13 

1 

11 

.05500 

66 

10 

.04583 

55 

9 

.03750 

45 

7/ 

8 

.03000 

36 

7 

.02333 

28 

6 

.01750 

21 

3/ 

5 

.01250 

15 

4 

.00833 

10 

3 

.00500 

6 

1 

2 

.00250 

3 

1 

.00083 

1 

[308] 

16 


DISTRIBUTION  OF  EARNINGS. 


EXAMPLE. 

At  3  per  centum  per  annum  on  one  share  of  $1.00  each  at  the  end 
of  the  48th  month— .98000  X  3  =  $2.94.  See  $48.00— Columns  A 
and  B. 

At  4  per  centum  at  the  end  of  the  64th  month— $1,73333  X  4  = 
$6.93.    See  $64.00— Columns  A  and  B. 

At  2  per  centum  per  annum  at  the  end  of  the  6th  month — .01750 
X  2  =  .03^.     See  $6.00— Columns  A  and  B. 


Rules  and  Tables  Exemplifying  the  Division  of  Profits  Under 
Dexter's  Rule  and  the  Partnership  Rule. 


Application  of  "Dexter's  Rule." 
Rule. 

1.  From  the  profits  at  the  date  of  making  a  report,  deduct  the 
profits  on  all  shares  in  all  series,  as  shown  by  the  last  preceding 
report,  the  remainder  will  be  the  net  profits  for  the  current  term. 

2.  To  find  the  capital  for  the  current  term,  multiply  the  value  per 
share  in  each  series,  as  shown  by  the  last  preceding  report  by  the  num- 
ber of  shares  in  force  in  said  series  at  the  date  of  making  the  current 
report,  to  the  sum  of  these  products  add  the  equalized  dues  for  the 
current  term,  the  result  will  be  the  total  capital  for  the  current  term. 

3.  To  find  the  per  cent  of  profit  for  the  current  term,  divide 
the  net  profits  for  the  current  term  by  the  total  capital  for  the  cur- 
rent term. 

4.  To  find  the  total  capital  of  one  share  in  each  series,  add  to  the 
value  per  share  as  shown  by  the  last  preceding  statement,  the  equalized 
dues  for  the  current  term.  The  capital  account  for  the  series  issued 
during  or  at  the  commencement  of  the  current  term  will  be  the 
equalized  dues  for  the  current  term. 

5.  To  find  the  profits  per  share,  multiply  the  total  capital  per 
shares  for  the  current  term  by  the  per  cent  of  profit  for  the  cur- 
rent term. 

Note.— The  phrase  "current  term"  as  here  used  is  intended  to 
mean  the  term  or  period  for  which  the  report  is  being  made,  whether 
annually,  semi-annually,  quarterly  or  otherwise. 

Note. — The  "equalized  dues  for  the  current  term"  is  such  a  sum 
as  invested   for  the  whole  time  will  equal  the   investment  of  the 

[309] 


CHAPTER  XXII. 

monthly  dues  on  one  share,  from  month  to  month,  for  the  same 
time  and  is  the  quotient  obtained  by  dividing  the  sum  of  the  months 
by  the  dues  per  share  for  the  current  term. 

For  the  following  tables  the  equalized  dues  is  obtained  thus . 


$1  00   for 12   months 

1  00  for 11  months 

1  00  for 10  months 

1  00  for »  months 

1  00  for 8  months 

1  00   for 7   months 

1  00   for 6   months 

1  00  for 5   months 

1  00   for 4   months 

1  00  for 3   months 

1  00  for 2  months 

1  00  for 1  month 

$12  00  for 78  months 

78  -T-  12=:$6.50  equalized  dues. 


$1  00  for 11  months 

1  00  for 10  months 

1  00  for 9  months 

1  00  for 8  months 

1   00  for 7  months 

1  00  for 6  months 

1  00  for 5  months 

1  00  for 4  months 

1  00  for 3  months 

1  00  for 2  months 

1  00  for 1  month 

$11  00  for 66  months 

66  -f-  11=:$6.00  equalized  dues. 


FIRST  ANNUAL  DISTRIBUTION. 


Proftts  at  end  of  first  year. 


$73  95 


$73.95  profits  -t-  100  shares  =r  profit  of  73  cents  per  share. 

General  Statement. 


Dues.           Profits.  Totals. 

100  shares  at  $12.00  per  share $1,200  00      

lOO  shares  at         .73  per  share $73  00  $1,273  00 

$1,200  00          $73  00  $1,273  00 

Undivided    profits 95  95 

$1,200  00          $73  95  $1,278  96 

SECOND  ANNUAL  DISTRIBUTION. 

Total  profits  at  end  of  second  year $369  28 

From  which  deduct  as  follows: 

Profits  on  100  shares.  Series  1.  at  73  cents 73  00 

Balance,  or  net  profits  for  year $296  28 


Capital  Account. 


100  shares.  Series  1,  at  $12.78 $1,273  00 

100  shares.  Series  2 

200  shares  at  $6.50  per  share,  equalized  dues 1,300  00 

Total  capital  participating  in  current  year  profits $2,573  00 

[310] 


DISTRIBUTION  OF  EARNINGS. 


Distribution  of  Profits. 

$296.28  (profits  for  current  year)    -i-  $25.73   (capital  for  current  year)  gives 
11.51  per  cent  of  profit 

Items.                     Series    1                   2 

Value  per  share  at  last  report $12  73 

Equalized  dues  for  current  year 6  50 

Total    capital $19  23 

Multiplied  by  per  cent  of  profit 1151 

(3ives  profit  per  share  of $2  21 

Value  of  Shares,  one  Share  in  Each  Series. 

Items.                    Series    1 

Value  at  last  report $12  78 

Profit  for  current  year 8  21 

Dues  for  current  year 12  00 

Present  value $26  94 

Total  dues  paid  per  share 24  00 

Total  profits $2  »4            $0  74 

General  Statement. 

Dues.  Profits.       Totals. 

100  shares.  Series  1,  at  $24.00 $2,400  00  

100  shares,  Series  1,  at      2.94 $294  00     $2,694  00 

100  shares.  Series  2,  at     12.00 1,200  00  

100  shares,  Series  2,  at        .74 74  00       1,274  00 

$3,600  00  $368  00     $3,968  00 

Undivided    balance 1  28              1  28 


■■■$6'56 

$  6  50 
11  51 

$0  74 

a 

■■$ '6'74 
12  00 

$12  74 
12  00 

$3,600  00        $369  28     $3,969  28 


THIRD  ANNUAL   DISTRIBUTION. 


Total  profits  to  date  of  this  statement $1,050  48 

From  which  deduct  as  follows: 

1 00  share*.  SpHos  1 .  at  $^.04 $294   00 

100  stares.   Series  2,  at       .74 74  00 

868  00 

Balance,  or  net  profits  for  current  year $682  48 


Capital  Account. 


100  shares.  Series  1.  at  $26.94 $2,694  00 

)  00  shares.  Series  2.  at     12.74 1,274  00 

100  shares.  Scries  3 

— —     $3,968  00 

300  shares  at  $6.50  per  share,  equalized  dues 1,950  00 

Total  capital  participating  in  current  year's  profit $5,918  00 

[311] 


CHAPTER  XXII. 


Distribution  of  Profits. 

$682.48    (profits    for    current   year)  -r-  $5,918.00    (capital    for    current   year) 
gives  11.53  per  cent  of  profit. 


Items.  Series     . 

Value  per  share  at  last  report . . . 
Equalized  dues  for  current  year. 

Total  capital 

Multiplied  by  per  cent  of  profit. . 


1 

$26  94 
6  50 

2 
$12  74 
6  50 

8 

""$6"66 

$33  44 
11  53 

$19  24 
11  53 

$6  50 
11  68 

Gives  profit  per  share  of $3  85  $2  21  $0  74 

Value  of  Shares,  one  Share  in  Each  Series. 


Items.  Series 

Value  at  last  report 

Profit  for  current  year , 

Dues  for  current  year 


Present   value 

Total  dues  paid  per  share. 


1 

$26  94 

3  85 

12  00 

2 
$12  74 
2  21 
12  00 

3 

'  "80*74 
12  00 

$42  79 
36  00 

$26  95 
24  00 

$12  74 
12  00 

Total  profits $6  79  $2  95  $0  74 

General  Statement. 

Dues.  Profits.        Totals. 

100  shares,  Series  1,  at  $36.00 $8,600  00 

100  shares.  Series  1,  at      6.79 $679  00     $4,279  00 

100  shares,  Series  2,  at    24.00 2,400  00      

100  shares,  Series  2,  at       2.95 295  00       2,695  00 

100  shares.  Series  3,  at    12.00 1,200  00      

100  shares.  Series  3.  at         .74 74  00       1,274  00 

$7,200  00     $1,048  00     $8,248  00 
Undivided  profits 2  48  2  48 

$7,200  00     $1,050  48     $8,250  48 

FOURTH  ANNUAL  DISTRIBUTION. 

Total  profits  at  end  of  fourth  year $2,301  05 

From  which  deduct  as  follows: 

Profits  on  100  shares.  Series  1,  at  $6.79. 

Profits  on  100  shares.  Series  2,  at     2.95. 

Profits  on  100  shares.  Series  8,  at       .74. 

1,048  00 

Balance,  or  net  profits  for  current  year $1,258  05 

Capital  Account. 

100  shares.  Series  1,  at  $42.79 $4,279  00 

100  shares.  Series  2,  at     26.95 2,695  00 

100  shares.  Series  3,  at     12.74 1,274  00 

100  shares.  Series  4 

— ^  $8,248  00 

400  shares,  at  $6.50  per  share,  equalized  dues 2,600  00 

Total  capital  participating  in  current  year  profits $10,848  Oo 

[312] 


$679  00 

295 

00 

74 

00 

DISTRIBUTION  OF  EARNINGS, 

Distribution  of  Profits. 

$1,258.05   (profits  for  current  year)  -^  $10,848.00  (capital  for  current  year) 
gives  11.55  per  cent  of  gain. 


Items.             Series    

Value  per  share  at  last  report 

Equalized  dues  for  current  year. . . 

1 
$42  79 
6  50 

2 

$26  95 
6  50 

8 

$12  74 
6  50 

4 

"ie'so 

Total   capital 

Multiplied  by  per  cent  of  profit . . . 

$49  29 
11  00 

$33  45 
11  55 

$19  24 
11  55 

$6  50 
11  55 

Gives  profit  per  share  of 

$5  69 

$3  86 

$2  22 

$0  76 

Value  of  Shares,  one  Share  in  Each  Series. 


Items.  Series 

Value  at  last  report 

Profit   for   current   year.. 
Dues  for  current  year 


Present  value , 

Total  dues  paid  per  share, 


1 

$42  79 
5  69 
12  00 

2 
$26  95 
3  86 
12  00 

8 

$12  74 
2  22 
12  00 

4 

"  $  *6  '75 
12  Of 

$60  48 
48  00 

$42  81 
36  00 

$26  96 
24  00 

$12  76 
12  00 

Total  profits $12  48  $6  81  $2  96  $0  76 


General  Statement. 


Dues.  Profits.       Totals. 

100  shares.  Series  1,  at  $48.00 $4,800  00      

100  shares.  Series  1,  at     12.48 

100  shares,  Series  2,  at     86.00 

100  shares.  Series  2,  at       6.81 

100  shares.  Series  3,  at     24.00 

100  shares.  Series  8,  at       2.96 

ICO  shares.  Series  4,  at    12.00 

100  shares.  Series  4,  at        .75 


Undivided  profits. 




$1,248  00     $6,048  00 

3,666  66 



681  00       4,281  09 

'2,466  66 



296  00       2,696  00 

1,200  00 



75  00       1.275  00 

$12,000  00 

$2,300  00  $14,300  00 

1  or.            1  05 

$12,000  00     $2,801  05  $14,801  05 


FIFTH  ANNUAL  DISTRIBUTION. 


ToUl  profits  at  end  of  fifth  year $4,325  75 

From  which  deduct  as  follows: 

Profits  on  100  shares.  Series  1.  at  $12.48 $1,248  00 

Profits  on  100  shares.  Series  2,  at      6.81 681  00 

Profits  on  ino  shares.  Series  R,  at       2.96 296  00 

Profits  on  100  shares.  Series  4,  at        .75 75  00 


2.300  00 


Balance  or  net  profits  for  current  year $2,025  75 

[313] 


CHAPTER  XXIL 
Capital  Account. 


100  shares.  Series  1,  at  $60.48 $6,048  00 

100  shares.  Series  2,  at     42.81 4,281  00 

100  shares.  Series  3,  at     26.96 2,696  00 

100  shares.  Series  4,  at     12.75 1,275  00 

100  shares,  Series  6 


$14,300  00 

500  shares,  at  $6.50  per  share,  equalized  dues 3,250  00 


Total  capital  participating  in  current  year  profits $17,550  00 

Distribution  of  Profits. 

$2,025.75    (profits   for  current  year)-r^  $17,550.00    (capital   for   current  year) 
gives  11.54  per  cent  of  gain. 

Items.  Series.       1 

Value  per  share  at  last  report $60  48 

Equalized  dues  for  current  year 6  50 

Total  capital 66  98 

Multiplied  by  per  cent  of  profit 11  54 

Gives  profit  per  share  of $7  72       $5  69       $3  86       $2  22       $0  75 

Value  of  Shares,  one  Share  in  Each  Series. 

Items.                                 Series.  1 

Value  at  last  report $60  48 

Profit  for  current  year 7  72 

Dues  for  current  year 12  00 


2 

$42  81 
6  60 

3 

$26  96 
6  50 

4 

$12  75 
6  50 

5 

"e'bb 

$49  31 
11  54 

$33  46 
11  54 

$19  25 
11  54 

$  6  50 
11  64 

Present  value $80  20     $60  50 

Total  dues  paid  per  share 60  00 


2 

$42  81 

5  69 

12  00 

3 
$26  96 
3  86 
12  00 

4 

$12  76 

2  22 

12  00 

5 

$0*75 
12  00 

$60  50 
48  00 

$42  82 
36  00 

$26  97 
24  00 

$12  75 
12  00 

Total   profits $20  20     $12  50       $6  85       $2  97       $0  76 

General  Statement. 


Dues. 

100  shares.  Series  1,  at  $60.00 $6,000  00 

100  shares,  Series  1,  at    20.20 

100  shares.  Series  2,  at    48.00 4,800  00 

100  shares,  Series  2,  at     12.50 

100  shares.  Series  3,  at    36.00 3,600  00 

100  shares.  Series  3,  at       6.82 

100  shares,  Series  4,  at     24.00 2,400  00 

100  shares.  Series  4,  at       '^.07 

100  shares.  Series  5,  at    12.00 1,200  00 

100  shares.  Series  5,  at         .75 


Undivided  profits. 


$18,000  00 


Profits. 

Totals. 

$2,020  00 

$8,026 '66 

1,250  00 

6,050  00 

682  00 

4,282  00 

297  00 

2.697  00 

■"75'66 

1,276 '66 

$4,324  00 
1  75 

$22,324  00 
1  75 

$18,000  00  $4,325  75  $22,325  76 


SIXTH  ANNUAL  DISTRIBUTION. 


Total  profits  at  end  of  5  years  and  11  months $7,057  31 

From  which  deduct  as  follows: 

Profits  on  100  shares,  Series  1,  at  $20.20 $2,020  00 

Profits  on  100  shares.  Series  2,  at    12.50 1,250  00 

Profits  on  100  shares.  Series  3,  at      6.82 682  00 

Profits  on  100  shares.  Series  4,  at      2.97 297  00 

Profits  on  100  shares.  Series  5,  at         .75 75'  00 


4,324  00 
Balance  or  net  profits  for  current  term $2,733  31 

[314] 


DISTRIBUTION  OF  EARNINGS. 

Capital  Account. 


100  shares.  Series  1,  at  $80.20 $8,020  00 

100  shares,  Series  2,   at     60.50 6,050  00 

100   shares.  Series  3,   at     42.82 4,282  GO 

100  shares,  Series  4,  at     26.97 2,697  00 

100  shares,  Series  5,  at     12.75 1,275  00 

100  shares.  Series  6 

$22,324  00 

600  shares  at  $6.00  per  share,  equalized  dues 3,600  00 

Total  capital  participating  in  current  terra  pro&ts $25,924  00 


Distribution  of  Profits. 

$2,733.31   (profits  for  current  term) -t- $25,924.00  (capital   for  current  term) 
gives  10.50  per  cent  of  profit. 

Items.                     Series.       12               3  4  5  6 

Value  per  share  at  last  report. .    $80  20     $60  50     $42  82  $26  97  $12  75      

Equalized  dues  for  current  year 

(11   months) 6  00         6  00         6  00  6  00  6  00  $6  00 

Total  capital $86  20     $66  50     $48  82  $32  97  $18  75  $6  00 

Multiplied  by  per  cent  of  profit      10  50       10  50       10  50  10  50  10  60  10  50 

Gives  profit  per  share  of.      $9  05       $6  98       $5  12  $8  4«  $1  96  $0  68 


Value  of  Shares,  one  Share  in  Each  Series. 

Items,                     Series.       12  3  4  5  6 

Value  per  share  at  last  r<  p.)rt. .    $80  20     $60  50  $42  82  $26  97  $12  75     

Profit  for  current  year 9  05         6  98  5  12  3  46  1  96  $  0  63 

Dues  for  current  year 1100       1100  1100  1100  1100  1100 

Present  value $100  25     $78  48  $58  94  $41  43  $25  71  $11  68 

Total  dues  paid  per  share 71  00       59  00  47  00  85  00  23  00  11  00 

Total  profit  per  share. ...   $29  25     $19  48  $11  94  $6  43  $2  71  $0  68 


General  Statement 

Dues. 

100  shares.  Series  1,  at  $71.00 $7,100  00 

106  shares,  Series  1,  at     29.25 

100  shares.  Series  2,  at    59.00 5,900  00 

100  shares.  Series  2,  at     19.4S 

100  shares,  Series  3,  at     47.00 4,700  00 

100  shares,  Series  3,  at     11.94 

100  shares,  Series  4,  at     35.00 3,500  00 

100  shares,  Series  4,  at       6.43 

100  shares,  Series  5,  at     23.00 2,300  00 

100  shares.  Series  5,  at       2.71 

100  shares.  Series  6,  at    11.00 1,100  00 

100  shares,  Series  6,  at         .63 


Undivided  profits. 


Profits. 

Totals. 

$2,925  00 

$10,025  00 

1,948  00 

7,848  00 

1,194  00 

5,894   00 

643  OO 

4,143  00 

271  00 

2,571  00 

63  00 

1,163  00 

$7,044  00 
13  31 

$31,644  00 
13  81 

$24,600     $7,057  81  $31,657  31 

[315] 


CHAPTER  XXII. 

Statement  showing    the  increase   in    the   value   of  Shares   by   the 
"Dexter's  Rule"  of  Division  of  Profits. 


Value.  Series.  1 

Value  January  1,  1881 $12  73 

Value  January  1,   1882 26  94 

Value  January  1,  1883 42  79 

Value  January  1,  1884 60  48 

Value  January  1,  1885 80  20 

Value  December  1.  1885 100  25 


$12  74 

26  99 

$12  74 

42  81 

26  96 

$12  75 

60  50 

42  82 

26  97 

$12  75 

78  48 

58  94 

41  43 

25  71 

$11  62 


Statement   showing   the   increase   in   the   value   of   Shares   by   the 
"Partnership  Rule"  of  Division  of  Profits. 


Value.  Series.       1 

anuary  1,  1881 $12  73 

anuary  1,  1882 26  93 

anuary  1,  1883 42  73 

anuary  1,  1884 60  21 

anuary  1,  1885 79  62 

ecember   1,    1885 99  20 


$12  73 

26  99 

$12  74 

42  86 

27  05 

$12  76 

60  55 

43  06 

27  13  $12  78 

78  47 

59  35 

41  85   25  95 

$11  67 


Rule  for  Computing  Interest,  and  table  showing  Interest  on  One 
Dollar  at  3  per  cent  "average  time"  from  i  to  120  Months. 


H 

5^ 

H 

^ 

s 

H 

Q 

H 

5^ 

H 

HH 

3 

q 

Q 

sr 

3 

y 

3 

3 

n 

>^ 

n 

n 

r 

r 

: 

r 

120 

.3000 

100 

.2500 

80 

.2000 

60 

.1500 

40 

.1000 

20 

.0500 

119 

.2975 

99 

.2475 

79 

.1975 

59 

.1475 

39 

.0975 

19 

.0475 

118 

.2950 

98 

.2450 

78 

.1950 

58 

.1450 

38 

.0950 

18 

.0450 

117 

.2925 

97 

.2425 

77 

.1925 

57 

.1425 

37 

.0925 

17 

.0425 

116 

.2900 

96 

.2400 

76 

.1900 

56 

.1400 

36 

.0900 

16 

.0400 

115 

.2875 

95 

.2375 

75 

.1875 

55 

.1375 

35 

.0875 

15 

.0375 

114 

.2850 

94 

,2350 

74 

.1850 

54 

.1350 

34 

.0850 

14 

.0350 

113 

.2825 

93 

.2325 

73 

.1825 

53 

.1325 

33 

.0825 

13 

.0325 

112 

.2800 

92 

.2300 

72 

.1800 

52 

.1300 

32 

.0800 

12 

.0300 

111 

.2775 

91 

.2275 

71 

.1775 

51 

.1275 

31 

.0775 

11 

.0275 

110 

.2750 

90 

.2250 

70 

.1750 

50 

.1250 

80 

.0750 

10 

.0250 

109 

.2725 

89 

.2225 

69 

.1725 

49 

.1225 

29 

.0725 

09 

.0225 

108 

.2700 

88 

.2200 

68 

.1700 

48 

.1200 

28 

.0700 

08 

.0200 

107 

.2676 

87 

.2175 

67 

.1675 

47 

.1175 

27 

.0675 

07 

.0175 

106 

.2650 

86 

.2150 

66 

.1650 

46 

.1150 

26 

.0650 

06 

.0150 

105 

.2625 

Sf) 

.2125 

65 

.1625 

45 

.1125 

25 

.0625 

05 

.0125 

104 

.2600 

84 

.2100 

64 

.1600 

44 

.1100 

24 

.0600 

04 

.0100 

103 

.2575 

83 

.2075 

63 

.1575 

43 

.1075 

23 

.0575 

03 

.0075 

102 

.2550 

82 

.2050 

62 

.1550 

42 

.1050 

22 

.0550 

02 

.0050 

101 

.2525 

81 

.2025 

61 

.1525 

41 

.1025 

21 

.0525 

01 

.0025 

Rule — To  find  the  interest  for  any  given  series  multiply  the  "Dues  Capital" 
of  the  series  by  the  amount  of  interest  set  opposite  the  average  number  of  months 
the  series  has  been  in  force. 

For  example — ^What  is  the  interest  on  a  series  80  months  old,  having  $20,000 
of  "Dues  Capital"?  The  average  -time  is  40  months.  The  interest  at  3  per  cent 
on  $1  for  40  months  is  10  cents.     $20,000X10=2,000. 

[316] 


DISTRIBUTION  OF  EARNINGS. 


-^ 

|u5 

"» 

PU^^I 

Dd 

•"S* 

S*,jj 

^ 

3  J^rt 

£ 

Q^'-g 

%> 

s 

K 

^ 

1^^ 

>  1 

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w  t; 

^  -S 

^u: 

iq 

«  ^ 

p.^ 

5^ 

1 

in 

is 

^  ^ 

H  :S 

^  - 

<  o 

^ 

0.  ^ 

a 

i      S 

« 

'>^    1 

o  1 

§^ 

*3  c 

Pl 

;^-^ 

<  " 

<-^  s 

^  V  V 

SI 

hi 

it^ 

<«  S  u 

•go'^ 

aos 

3  ^  i: 

^^^ 

<«  "* 

J3 

c2 

O  o 

s 

Series 

§ 


w  >  o 


g?2 


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s§ 

is 

5** 

CO 

§g 

o    . 

§§ 
S^- 

o     • 

o    . 

CO     . 

oo 
oo 
00  »j 


oru3 
o.S  o 


ousooeo 


eoo»' 


ooo 
ooo 

ooooe^ 


00.2  o 


ooo 
ooo 
<0'<«<e4 


e4Q0xe>i 

rlOOWM 

O  ift 

oe^t-^c^ 

OJrH 
00  iH 

oooo 
oooo 
ooeo  -^  o 


rH<0lO<0 
(NOOOt^ 
CJ<D0O 


OOOO 

oooo 
Moqooeo 
kO'^00  t-T 


oooo 
oooo 
ooco-^&i 


o-o*- 


[317] 


CHAPTER  XXII. 


O  aj  i; 


S  «>  rt 
1—4         in 


^  CO 


«;  ih  w 

(O 


u  V  V 


ti  u  a 


^  h  ^ 
3  «  <« 


Bog 


c2 
o  o 

Series 


M  in  ?o  eo  00 


00000 
00000 
O  00  «o  ■*  e>j 


o)  10  «o  CO  00 

«o  ino  1-1 1~ 


o  l« 
«5  0» 


oooo  o 
00000 
o  ea  CO  00  C4 


OTS 
0*0  ■»-> 


05    C 


ooooo 
oooo© 


ot^ininiot^ 

ei  ^  CO  00  o»  «o 

05  00  A  l-l  Ift  t-t 


000000 
ooo  000 
i-<  OS  t-ioeo  i-< 
1^  »n  •>*  ec  ea  rH 


O  t>  la  kA  IQ  1^ 

(M-^eooo  oso 

00  C5  C<I  CO  C^ 


OOOOO© 

10  10  10  10  10  >n 
o  O^"*  *i  ■^o 

cT-^jTo  rH<0<0 
<N  tHi-H 


10  in  »o  in  ift  in 

in  oj  05 1-^  rH  in 


000000 
000000 

rH  ©  t^  in  W  i-< 


CO  C 


[318] 


t1  g 


1 

0 

3 

1 
1 

.S  c  S  13   . 

c 

s 

f^^l 

0 

^„oo^: 

c 

0 

c 

e  th 
rofit 
the 
rofit 
epe 

a 

0 

>  ao  0.3 

•  X 

•5^-"  ulo 

S 

1 

will   1 
ent  0 
:  will 
ve  th 
the  V 

2 

0 

M 

ss 

s"|"-S 

"5 

0 

a  aj'Or^ 

Ji 

'i 

0 

rodi 
te  p 

pro 
t  wi: 

will 

pS 

""• 

a> 

a«  (L)  c*" 

w 

c« 

'-JS  «>  0 

c 

0 

ii^;is 

is 

rt 

1    series. 
:nts,  for  t 
■  gain,  an 
es,  the  qt 
le  sum  th 

c 

^ 

be 

a> 

>< 

'Co 

1/1 


d  »-*«  w  art  4) 


«  g  5  S  ^'S  a| 

J2  O   >>X1  ^  3  «  ''' 

.  y  ^  ■"  o  s  >'  -^ 


•••-i'riT'.T)  J3-J5 


^  O--^  13  '5  -a  J3 

.2-«'3;>  3;Eo« 
I^S s 

;    pU  1-1  fM  «  ■*  >0  ■*- 


DISTRIBUTION  OF  EARNINGS. 


SIMPLE  INTEREST. 

The  following  method  for  calculating  simple  interest 
is  one  found  to  be  most  practical. 

Interest  is  usually  calculated  on  the  basis  of  360  days  to  the  year. 

The  simplest  method  of  computing  interest  is  to  do  it  at  the  rate 
of  6  per  cent  per  annum,  and  add  or  subtract  when  it  is  higher  or 
lower  than  that. 

The  interest  for  60  days  at  6  per  cent  per  anntmi  is  equal  to  as 
many  cents  as  there  are  dollars,  or  in  other  words,  is  1  per  cent  of  the 
principal. 

The  reason  of  this  is  obvious.  6  per  cent  per  annum  is  ^2  per  cent 
per  month,  or  1  per  cent  for  two  months,  or  60  days. 

The  interest  for  $750,  $225,  $327.50,  for  60  days,  at  6  per  cent  is 
$7.50,  $2.25,  $3.28. 

Having  the  interest  for  6o  days,  the  interest  for  any  shorter  time 
may  be  found  by  the  use  of  all  aliquots  of  6o. 

AUQUOTS  OF  60. 

30=H,  20=^,  15=54,  12=H. 

lQz=ye,  6=V«,,  5=Vi,,  4=V«. 
3=7.,,  2=V«,,  1=7.,. 
When  the  number  is  not  an  aliquot  of  6o: 

For    7  take 6  and    1. 

"     8    "    6     "      2. 

"   14    "    12     "      2. 

•'   19    "    15     "      4. 

"   26    "    20     "      6. 

"   27    "    15     '*    12. 

"   29  .  '•    1    off  30. 

**   35    "    :^  and    5. 

"   38    *'    30,  6,  and  2. 

"   43    '•    30,  12,  and  1. 

"   45    "    15  off    60. 

"   85   add 20  and    5. 

1.  To  find  the  interest  on  $375.67,  for  15  days,  at  6  per  cent  per 
annum : 

4)3.76=interest  for  60  days. 


.94=imerest  for  15  days. 
[319] 


CHAPTER  XXII. 

Interest  is  seldom  computed  on  cents  by  secretaries.  For  50  cents 
$1  is  added  to  dollars ;  less  than  50  cents  are  rejected. 

To  find  the  interest  for  a  number  of  days  that  is  an  aliquot  of  6o, 
zve  take  that  part  of  the  interest  for  6o  days.  For  30  days  we  take 
y^y  20  days  Yz,  15  days  %,  etc.  When  the  number  is  not  an  aliquot  it 
is  made  up  of  aliquots,  as  shown  in  the  preceding  table. 

2.  To  find  the  interest  on  $675.15,  for  27  days,  at  6  per  cent  per 
annum  : 

$6.75=interest  for  60  days. 


1.687=H  or  for  15  days. 
1.35  =^  or  for  12  days. 


3.037=interest  for  27  days. 

The  following  table  shows  the  interest  on  any  amount 
from  $1  to  $5,000  for  any  number  of  weeks  from  1  to  52. 
From  this  table  the  interest  at  any  other  rate  per  cent  can 
be  found  by  aliquot  parts  as  explained  before. 


[320] 


DISTRIBUTION  OF  EARNINGS. 


CO(NOO'^OCD<MQO'<^OOOOOOOOOOOOQQ^ 
O— •r-iC^COCO'<S<"«T'iO<0<NC30'>i<<0000000000  0 


i-trHC^COCO<MQO-<^OOOQOQ 
i-ii-i  C^  CO 


CO<X>OS<MiOOOr-iTt*t^OCOOOQOOOOOOOQQ 
OOOr-n-ti-HC^ICaC^COtOOSC^IiOOOOOOOOOOO 

r-(r-tCO«OOS<MiOOOOOO 
1-1  1-1  00  CO  05  c^  »o 


?Ot^OiONeo»OOiOQ»OOQOOOOOCOO 
OOOrHi-Hi-jrHCO^®t^U30iOO»000000 

r-i00Tt<C0t>l6OlOQlO 

1-tCO  •^  «o  t^ 


81 


lO  C5  CO  CO  iO  CO  C^J 
lO  CO  CO  t>^  i-J  id  C: 


»0  CO  l^  OS  O  '^  00  i 
■  O  O  O  O  »-t  i-n-< 


"'*»  CO  t>»  GO  05  O  ^^  ' 
OOOOOi-Hr-l' 


r-t  ©I  CO -^  »0  t-H  ( 


i-.NCO'^iOOOi-t-^ 


l-H  C^ 


.-t(NeO"^:*»pcDI^QO^i 
OOOOOOOOOOi 


rHNCO'^OS 


C0  05  5JI 

-^COOS^ 

00  t>lcD  I 

i-io«5i5' 


CO  •<»< 


CO  •^OOCO-rfi 
*r-i©ii 


i-ic^c^eoco» 


oo 


OOOOOOOi-Hi-Hi 


t^  -^   .-I  00  Tf 

t-.tO  CO  c;  cc 


ooooooooo 


S:: 


i  •^  I— t  ^^  ( 
00  00  CO  ' 


^  (N  C^  (M  CO  CO  CO  I 
OOOO  OOOi 


C^l  00  •^  I-" 

Oi  00  00  CO 

cooco  t>- 


rH  (M  Tf  CO  Ci  — , 


OOOOOi 


a 
o 

4- 


■^  lO  CO  t^  00  a>  o  I 


OOO  O  O  ' 
i-<(MCO' 


[321] 


CHAPTER  XXIII. 


Legal  Forms  for  Associations. 


In  order  to  save  time  and  labor,  to  facilitate  and  to 
expedite  business,  and  to  secure  accuracy  and  uniformity, 
every  association  should  be  supplied  with  a  set  of  blank 
legal  forms  for  the  proper  transaction  and  recording  of 
its  business.  Such  papers  must  be  drawn  in  accordance 
with  the  statutes  and  with  the  rules  of  associations.  Since 
the  statutes  differ  and  rules  are  not  at  all  uniform  it  is 
not  possible  to  present  a  full  set  of  model  blanks. 

SPECIMEN  BLANKS. 

The  forms  printed  in  this  chapter  are  in  general  use. 
They  are  given  without  approval  or  criticism  in  the 
expectation  that  before  being  followed  by  any  association 
they  will  be  examined  carefully  to  see  if  they  are  in 
proper  form  for  use  by  that  particular  association.  An 
examination  of  these  forms  will  indicate  anew  the  neces- 
sity for  closer  co-operation  among  building  associations 
so  as  to  secure  more  uniform  methods  of  operation. 


[322] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

ARTICLES   OF   INCORPORATION    (OHIO). 

These  Articles  of  Incorporation  of  The 

Building  and  Loan  Company. 

Witness,  That  we,  the  undersigned,  natural  persons,  all  of  whom 
are  citizens  of  the  State  of  Ohio,  desiring  to  form  a  corporation,  for 
profit,  under  the  general  corporation  laws  of  said  state,  do  hereby 
certify: 

1.  The  name  of  said  corporation  shall  be  The 

Building  and  Loan  Company. 

2.  Said  corporation  is  to  be  located  in 

County,  Ohio,  and  its  principal  business  there  transacted. 

3.  Said  corporation-  is  formed  for  the  purpose  of  raising  money  to 
be  loaned  among  its  members,  as  provided  by  law. 

4.  The  capital  stock  of  said  corporation  shall  be 

dollars,  divided  into shares  of 

dollars  each. 


In  Witness  Whereof,    We  have  hereunto  set  our  hands,  this . 
day  of 191.. 


STATE  OF  OHIO,  | 

County  of (    ^^• 

Personally  appeared  before  me,  the  undersigned,  a  Notary  Public 

within  and  for  said  County,  this day  of 191. ., 

the  above-named 


who  each  severally  acknowledged  the  signing  of  the  foregoing  articles 
of  incorporation  to  be  his  free  act  and  deed,  for  the  uses  and  purposes 
therein  mentioned. 

Witness  my  hand  and  official  seal  on  the  day  and  year  aforesaid. 


Notary  Public. 
[323] 


CHAPTER  XXIII. 


STATE  OF  OHIO,  ( 

County  of j    ^^• 

I, ,  Clerk  of  the  Common  Pleas,  within  and  for 

the  County  aforesaid,  do  hereby  certify  that , 

whose  name  is  subscribed  to  the  foregoing  acknowledgment  as  a 
Notary  Public  was  at  the  date  thereof  a  Notary  Public  in  and  for 
said  County,  duly  commissioned  and  qualified,  and  authorized  as  such 
to  take  said  acknowledgment ;  and  further,  that  I  am  well  acquainited 
with  his  handwriting,  and  believe  that  the  signature  to  said  acknowl- 
edgment is  genuine. 

In  Witness  Whereof,  I  have  hereunto  set  my  hand  and  affixed 

the  seal  of  said  Court,  at ,  Ohio,  this day 

of 191.. 


Clerk. 
By Deputy. 


United  States  of  America,  Ohio,  | 
Office  of  the  Secretary  of  State.  )     ^^• 

I, ,  Secretary  of  State  of  the  State  of  Ohio, 

do  hereby  certify  that  the  foregoing  is  a  true  copy  of  the  Articles  of 

Incorporation  of  ''The Building  and  Loan 

Company"  filed  in  this  office  on  the day  of 191. ., 

and  recorded  in  volume. ,  page ,  of  the  Records  of 

Incorporation. 

In  Testimony  Whereof,  I  have  hereunto  subscribed  my  name 

and  affixed  my  seal  of  office,  at  Columbus,  the day  of , 

A.  D.  191.. 


Secretary  of  State. 
By Deputy. 


[324] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


SUBSCRIPTION  LIST 


The Building  and  Loan  Association 

of 

We,  the  undersigned,  hereby  agree  to  take  the  amount  of  shares 

of  stock  in  The Building  and  Loan  Association 

of as  set  opposite  our  names. 

Shares Weekly  Dues Admission  fee 

In  order  to  facilitate  the  permanent  organization  of  said  associa- 
tion, we  hereby  waive  the  statutory  notice  of  thirty  days,  for  holding 
of  an  election  for  Board  of  Directors  of  said  association. 


Name. 

Rrsidbncb. 

Shares. 



PROXY  ON  STOCK. 

Be  it  Known,  that  I,  the  undersigned  stockholder  in 

The Building  and  Loan  Association, 

do  hereby  appoint 

true  and  lawful  attorney,  with  power  of  substitution  and  revocation, 

for and  in name. .,  to  vote  at  the 

meeting  of  stockholders  in  said  association,  to  be  held  on 

,  the day  of 191. . 

Done  at on  this day  of 

191.. 


[325j 


CHAPTER  XXIII. 

BOND  OF  OFFICERS  (OHIO). 

Know  all  Men  by  these  Presents : 

That as  principal, 

and as  sureties, 

are  firmly  held  and  bound  unto  The Building 

and  Loan  Company,  a  corporation  under  the  Laws  of  Ohio,  in  the 

sum  of thousand   ($ 000.00)  dollars,  to  be  paid 

to  said  corporation,  its  successors  or  assigns,  for  which  payment  well 
and  truly  to  be  made  we  bind  ourselves,  our  heirs,  executors,  and 
administrators,    jointly    and     severally,    firmly    by    these    presents, 

SEALED  with  our  seals,  dated  the day  of 

one  thousand  nine  hundred  and 

The  Condition  of  the  above  obligation  is  such  that  whereas  the 

said was  on  the day 

of A.  D.  19L.,  duly.. as 

of  said  corporation. 

Now,  therefore,  if  the  said 

shall  faithfully  perform  all  and  singular  the  duties  incumbent  upon 
him  as  such  officer  aforesaid  as  prescribed  by  the  Constitution  and 
By-Laws  of  said  corporation  (which  are  made  part  hereof)  and 
according  to  the  orders  of  the  Board  of  Directors  of  said  corporation, 
and  shall,  when  duly  requested  by  the  Board  of  Directors  of  said 
corporation,  turn  over  to  such  person  or  persons  as  it  may  designate, 
all  books,  papers,  receipts  or  other  documents,  money  or  moneys,  or 
other  property  of  any  nature  whatsoever,  belonging  to  said  corpora- 
tion or  to  which  the  said  corporation  may  have  the  right  of  pos- 
session, then  these  presents  to  be  void,  otherwise  to  remain  in  full 
force  and  virtue. 


Signed  and  sealed  in  our  presence: 


1 


Seal. 
Seal. 
Seal. 


I 


Note. — Bonds  are  backed  for  filing  as  follows: 

Bond  of as of  The 

Building  and  Loan  Company. 

Attorney. 


[326] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

MORTGAGE  (OHIO). 

Know  all  Men  by  these  Presents : 


That. 


in  consideration  of 

dollars,  the  estimated  value  of 

shares  of  its  capital  stock,  advanced  and  paid  to  said 

by 

The Building  and  Loan  Company, 

of ,  Ohio,  a  Corporation  under  the  Laws  of  Ohio, 

the  receipt  of  which  is  hereby  acknowledged,  do  hereby  GRANT, 
BARGAIN,  SELL,  and  CONVEY  to  the  said  Building  and  Loan 

Company,  its  successors  and  assigns,  forever,  the  following 

estate,  situated  in  the  County  of ,  State  of 

,  and  bounded  and  described  as  follows : 


and  all  the  ESTATE,  TITLE,  and  INTEREST  of  the  said  grantor 
either  in  Law  or  in  Equity,  of,  in  and  to  the  said  premises :  TO- 
GETHER with  all  the  privileges  and  appurtenances  to  the  same 
belonging,  and  all  the  rents,  issues,  and  profits  thereof;  TO  HAVE 
AND  TO  HOLD  the  same,  in  fee,  to  the  use  of  said  Building  and 
Loan  Company,  its  successors  and  assigns,  forever. 

AND   the    said 

for and  for heirs,  executors,  and  administrators,  do 

hereby  COVENANT  with  the  said  Building  and  Loan*  Company,  its 

successors  and  assigns,  that is  the  true 

and  lawful  owner  of  the  said  premises  and  have  full  power  to 
convey  the  same,  and  that  the  title  so  conveyed  is  CLEAR,  FREE  and 

UNINCUMBERED;     and    further,    that will    WARRANT 

and  DEFEND  the  same  against  the  claims  of  all  persons  whom- 
soever. 


[327] 


CHAPTER  XXIII. 

Provided,  nevertheless,  that,  whereas  the  said 

ha.,   become  a  member  of  said  Building  and 

Loan  Company,  and  subscribed  to share  therein  to  be  paid 

in  weekly  installments  of per  share,  and  received  in  advance 

from  said  Company  said  $.. ,  the  estimated  value  of  said 

share ,  shall  pay  said  Company,  according  to  the  Constitution 

and  By-Laws,  without  demand  therefor  any  fines  and  assessments 

thereby   imposed,    and    said   weekly   installments    of pei 

share  as  premium  on  said  advance,  and  an  interest  upon  said  $ 

in  weekly  payments   of cents   per  share    for  the   first  year, 

and  thereafter  a  weekly  sum  or  amount  sufficient  to  keep  the  interest 
upon  the  amount  due  at  the  beginning  of  each  year  at  the  rate  of  six 

per  cent  per  annum  until  the  full  amount  of  said shares  shall 

have  been  paid,  with  all  dues,  premium,  interest,  fines,  etc.,  thereon 
according  to  the  Constitution  and  By-Laws,  and  shall  pay  all  taxes, 
assessments,  insurance,  ground  rents,  or  charges  of  any  kind  that 
may  become  due  and  payable  on  said  property;  and  in  case  of  default 
in  making  any  of  said  payments  for  a  period  of  ninety  days,  and  a 
suit  of  foreclosure  be  brought  therefor,  then  the  amount  of  the  face 
of  this  mortgage,  with  all  arrearages  thereon,  less  the  credits  paid 
upon  the  principal,  shall  become  due  and  payable  at  once,  all  as  pre- 
scribed by  the  said  Constitution  and  By-Laws;  and  if  the  said 
shall  comply  with  all  the  foregoing  obliga- 
tion's, then  these  presents  shall  be  void. 


In    Witness   Whereof,   the    said. 


who  hereby  release right  and  expectancy  of  dower  in  said 

premises,  ha. .  hereunto  set hand  this day  of 

in  the  year  of  our  Lord,  one  thousand  nine  hundred  and 

(191..). 

Signed,  sealed  and  acknowledged  in  presence  of  us : 


[328] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


The  State  of  Ohio,  County  of ,  ss. 

Be  it  remembered,   That  on  the day  of 

in  the  year  of  our  Lord,  one  thousand  nine  hundred  and 

(19     ),  before  me,  the  undersigned,  a  Notary  Public,  in  and  for  said 
County,  personally  came 

the    grantor   in 

the  foregoing  mortgage,  and  acknowledged  the  signing  and  sealing 

thereof   to  be voluntary  act  and  deed,   for  the  uses  and 

purposes  therein  mentioned. 

In  Testimony  Whereof,  I  have  hereunto  subscribed  my  name  and 
affixed  my  notarial  seal  on  the  day  and  year  aforesaid. 

Notary  Public, County.Ohio. 

191.. 

The  within  mortgage  being  fully  paid  and  satisfied,  may  be  can- 
celled off  record,  by  order  of  the  Board  of  Directors. 

The Building  and  Loan  Company. 

By ,  President. 

and ,  Secretary. 


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;329] 


CHAPTER  XXIIL 

MORTGAGE  CLAUSE  FOR  INSURANCE  POLICIES. 

It  Being  Hereby  Understood  and  Agreed,  That  this  insurance,  as 
to  th€  interest  of  the  Mortgagee  or  Trustee  only  therein,  shall  not  be 
invalidated  by  any  act  or  neglect  of  the  Mortgagor  or  Owner  of  the 
property  insured,  or  by  the  occupation  of  the  premises  for  purposes 
more  hazardous  than  are  permitted  by  the  terms  of  this  Policy. 
Provided,  Also,  that  in  case  the  Mortgagor  or  Owner  neglects  or 
refuses  to  pay  any  premium  due  under  this  Policy,  then,  on  demand, 
the  Mortgagee  or  Trustee  shall  pay  the  same.  Provided,  also,  that 
the  Mortgagee  or  Trustee  shall  notify  this  Company  of  any  change 
of  ownership  or  increase  of  hazard  which  shall  come  to  his  or  her 
knowledge,  and  shall  have  permission  for  such  change  of  ownership 
or  increase  of  hazard  duly  indorsed  on  this  Policy.  And  Provided 
Further,  That  every  increase  of  hazard  not  permitted  by  the  Policy 
to  the  Mortgagor  or  Owner  shall  be  paid  for  by  the  Mortgagee  or 
Trustee  on  reasonable  demand,  and  after  demand  made  by  this  Com- 
pany upon,  and  refusal  by,  the  Mortgagee  or  Owner  to  pay,  accord- 
ing to  the  established  schedule  of  rates.  It  is,  however,  understood 
that  this  Company  reserves  the  right  to  cancel  this  Policy,  as  stipulated 
in  the  printed  conditions  in  said  Policy ;  and  also,  to  cancel  this  agree- 
ment on  giving  ten  days  notice  of  their  intention  to  the  Trustee  or 
Mortgagee  named  therein,  and  from  and  after  the  expiration  of  the 
said  ten  days,  this  agreement  shall  be  null  and  void.  It  is  Furthfj? 
Agreed,  That  in  case  of  any  other  insurance  upon  the  property  hereby 
insured,  then  this  Company  shall  not  be  liable  under  this  Policy  for 
a  greater  portion  of  any  loss  sustained  than  the  sum  hereby  in-sured 
bears  to  the  whole  amount  of  insurance  on  said  property,  issued 
to  or  held  by  any  party  or  parties  having  an  insurable  interest  therein. 
It  is  also  Agreed,  That  whenever  this  Company  shall  pay  the 
Mortgagee  or  Trustee  any  sum  for  loss  under  this  Policy,  and  shall 
claim  that  as  to  the  Mortgagor  or  Owner,  no  liability  therefor  exists, 
it  shall  at  once,  and  to  the  extent  of  such  payment,  be  legally  subro- 
gated to  all  the  rights  of  the  party  to  whom  such  payments  shall 
be  made,  under  any  and  all  securities  held  by  such  party  for  the 
payment  of  said  debt.  But  such  subrogation  shall  be  in  subordina- 
tion to  the  claim  of  said  party  for  the  balance  of  the  debt  so  secured. 
Or  said  Company  may,  at  its  option,  pay  the  said  Mortgagee  or 
Trustee  the  whole  debt  so  secured,  with  all  the  interest  which  may 
have  accrued  thereon  to  the  date  of  such  payment,  and  shall  there- 


[330] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

upon  receive  from  the  party  to  whom  such  payment  shall  be  made  an 
assignment  and  transfer  of  said  debt,  with  all  securities  held  by  said 
parties  for  the  payment  thereof. 

This  slip  being  attached  to  Policy  No of  the 

Insurance  Company,  forms  part  of  said  Policy. 

Dated 

,  Secretary. 


[331] 


CHAPTER  XXIII. 


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[332] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 
MECHANICS*  LIEN  (OHIO). 

,  Ohio m.. 

In  consideration   of   ont  dollar,  and  other   valuable   considera- 
tions, the  receipt  of  which  is  hereby  acknowledged,  

do  hereby  agree  with 

The Building  and  Loan  Company 

of County,  Ohio, 

that will  not  take  a  mechanics'  lien  on  the  real   estate 

of   situated 

County,  Ohio,  to  secure  amount  due  or  to  become  due , 

for  material  furnished  or  labor  performed  in  or  about  the  erection 

of   , 

on  said  real  estate,  under  contract  made  with  the  said 

and hereby  waive  any  right  of  priority  of  lien 

might  have  on  said  real  estate  in  favor  of  said  Company. 

COLLATERAL  NOTE  FOR  LOAN  ON  PASS  BOOK. 
$ 191.. 

after  date promise  to  pay 

to  the  order  of 

The Building  and  Loan  Association, 

of 

Dollars, 

with per  week  interest,  the  same  being per  cent, 

on  the  amount  of  loan,  and  herewith  transfer  my  Pass  Book 
No to  said  Association,  to  be  held  as  collateral  until  pay- 
ment of  this  loan^  said  loan  being  subject  to  the  Constitution  and 
By-Laws  of  the  Association. 

Value  received 

No Due 


STUB. 

$ 

Date 

No Due. 

[333] 


CHAPTER  XXIII. 

ATTORNEY'S  REPORT. 

To  the  Board  of  Directors  of 

The Building  and  Loan  Association 

of 

Gentlemen : 

I  find  that  the  title  to  property  of 


situated 


is  in  the  name  of  said  party,  as  the  same  appears  indexed  of  Record 

in  the  Recorder's  Office  of County,  State 

of  Ohio,  subject  however  to  the  following  encumbrance : 


The  taxes  are. 
Remarks 


Respectfully  submitted, 

Attorney. 

191.. 


[334] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


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[335] 


CHAPTER  XXIV. 


Books  and   Blanks, 


GENERAL  SUGGESTIONS. 

The  keeping  of  the  accounts  of  the  associations  is  a 
matter  too  extensive  to  be  discussed  in  all  its  details  here. 
In  point  of  fact  there  is  not  yet  that  uniformity  in  the 
methods  of  bookkeeping  in  associations  which  we  may 
certainly  expect  to  see  introduced  in  the  near  future.  The 
improvements  which  have  appeared  in  the  last  few  years 
are  manifold. 

A  good  illustration  of  the  labor-saving  methods  w^hich 
are  being  introduced  is  seen  in  the  Dues,  or  Secretary's 
Book.  Formerly  postings  were  made  from  this  book 
weekly  (or  monthly)  after  each  meeting.  The  book  is 
now  usually  made  with  a  column  set  apart  for  each 
evening's  receipts  and  a  numbered  line  for  each  member's 
book.  The  book  is  arranged  in  sections  covering  each 
quarter  or  half  year,  with  necessary  rulings  for  totals. 
These  totals  are  posted  quarterly  or  semi-annually.  It  is 
easy  to  see  how  much  time  and  labor  is  saved  and  how 
much  the  liability  to  error  is  lessened  by  the  new  method. 

The  Secretary's  Cash  book  is  also  now  arranged  with 
polyform  columns  and  rulings,  so  that,  as  the  secretary 

[336] 


BOOKS  AND  BLANKS. 

enters,  meeting  by  meeting,  the  various  receipts  and  dis- 
bursements, each  upon  its  appropriate  line  in  its  appro- 
priate column,  it  is  virtually  posted  to  its  appropriate 
account.  He  is  thus  able  at  any  time,  without  the  trouble 
of  making  up  a  balance  sheet  or  detailed  statement,  to 
read  off  from  the  page  of  his  cash  book  the  actual  financial 
standing  of  the  association,  the  amount  of  gain  and  loss 
on  each  item,  etc.,  and  at  the  end  of  the  term,  he  simply 
enters  the  entire  amount  of  each  item  on  its  account  in 
the  ledger.  Formerly,  the  custom  was  to  enter  all  such 
items,  meeting  by  meeting,  in  an  ordinary  cash  book  and 
then  to  journalize  and  to  post  them  into  the  ledger — a 
very  burdensome  task,  as  secretaries  will  testify. 

In  addition  to  the  improvements  noted  in  these  two 
books  a  large  number  of  other  books  and  various  blanks 
and  forms  have  been  devised  to  save  labor,  to  secure 
accuracy,  and  to  expedite  the  business  of  associations. 

The  work  of  an  association  in  the  taking  of  dues,  etc., 
must  be  done  so  quickly,  and  as  accuracy  in  all  things  is  so 
essential  to  the  success  of  the  association,  directors 
and  officers  should  be  careful  to  adopt  the  best  system 
possible  and  to  provide  themselves  with  the  best  and  most 
convenient  books  and  forms.  It  is  especially  desirable 
that  the  system  adopted  should  be  so  simple  and  com- 
prehensive that  its  workings  can  be  understood  easily 
even  by  uneducated  and  inexperienced  members.  The 
books  and  forms  should  be  those  that  have  stood  the  test 
of  actual  experience  and  have  given  satisfaction.  In 
ordering  books  care  must  be  taken  that  they  correspond 

[337] 


CHAPTER  XXIV. 

to  each  other,  so  that  all  will  fit  in  properly  as  parts  of 
one  system. 

Economy  should  be  practiced  in  the  purchase  of  books 
as  in  all  matters  connected  with  an  association.  But  it 
will  be  found  poor  economy  that  does  not  provide  the 
best  available  books  for  the  keeping  of  the  accounts  and 
records. 

BOOK  ACCOUNT. 

Many  secretaries  keep  a  separate  account  of  the  blank 
books  and  pass-books  used  by  the  association.  Secretaries 
sometimes  have  difficulty  with  this  account.  The  matter 
is  very  simple  when  once  understood.  The  cost  of  all 
books  purchased  should  be  separately  charged  to  the  book 
account,  and  all  receipts  from  members  for  pass-books 
should  be  credited  to  this  account.  At  the  end  of  each 
fiscal  term  a  certain  percentage,  to  cover  the  cost  of  the 
books  in  use  for  that  term  as  determined  by  the  board  of 
directors,  should  be  charged  to  the  profit  and  loss  account. 
The  following  exhibit  illustrates  how  this  account  may 
be  kept : 


[338] 


BOOKS  Ax\D  BLANKS, 
BOOK  ACCOUNT. 


Jan.  16 
Jun.29 

Cash  (Acc't  Books) 
"     600  Pass  Books 

P.  &  Iv.  gain  on  64 
Pass  Books. 

6 
6 

J72  00 
65  00 

8  69 

Jan.  29 

By  cash  64  P.  Bks.  25c 
•'^6jtP.&I..AcctBks 

By  Bal.  Acc't  Books 
''    "   Pass  Bks.  (480) 

7 

116  00 
800 

68  41) 
47  Wi 

186  96 

185  96 

July  1 

Bal.  Acc't  Books. 
"  486  Pass  Bks.  11 

9 
9 

168  40 
47  96 

PASS-BOOKS. 

The  pass-book  is  the  book  furnished  to  each  member  by 
an  association,  in  which  are  recorded  the  receipts  for  his 
dues  as  he  pays  them  from  meeting  to  meeting.  This 
book  is  known  under  various  names,  as  'Tass-Book/' 
''Member's  Book,"  ''Receipt  Book,"  "Stock  Book,"  etc. 
There  is  so  much  inquiry  in  reference  to  these  books,  and 
such  frequent  difficulty  in  new  associations  in  getting 
them  in  proper  form,  that  a  full  description  is  given  here 
to  assist  persons  interested  in  organizing  associations. 

These  books  are  subjected  to  constant  usage  and  must 
last  a  long  time.  Usually,  a  period  of  from  six  to  ten 
years  must  elapse  before  the  stock  is  finally  paid  up.  Pass- 
books should  therefore  be  made  of  good  paper,  in  strong 
and  durable  binding,  of  convenient  size,  and  to  open 
easily.  For  the  convenience  of  officers  and  members,  and 
in  order  to  expedite  the  business  of  the  association,  pass- 
books should  be  carefully  and  systematically  arranged 
and  properly  adapted  for  their  purpose. 

Pass-books  are  usually  4  to  4J^  inches  in  width  and 
6  to  7  inches  in  length.  They  should  contain  the  constitu- 

[339] 


CHAPTER  XXIV. 

tion  and  by-laws  of  the  association,  a  blank  certificate  of 
stock,  blanks  for  transfers  of  stock,  and  16  leaves — 32 
pages — properly  ruled  and  lettered  for  receipts  for  dues. 
The  certificate  of  stock  is  as  follows: 

The Building  and  Loan  Association, 

of 

Book  No Certificate  of  stock. 

This  Certifies,  that 

is  entitled  to shares,  subscribed  in  The 

Building  and  Loan  Association,  which  are  to  be  regulated  and 
controlled  by,  and  which  may  be  transferred  according  to  the 
Constitution  and  By-Laws  of,  said  Association.* 

Admission  Fee,  $ Book, cents. 

Received  Payment, 

Secretary. 

,19.. 

The  certificate  of  stock  is  made  to  occupy  one  page  of 
the  pass-book.  On  the  back  of  this  certificate  should  be 
printed  two  or  three  blanks  for  the  transfer  of  shares,  as 
follows : 

For  value  received,  I  hereby  transfer  to 

all  my  claims,  rights,  and  interest  in 

shares  of  the  capital  stock  of 

The Building  and  Loan  Association, 

of ,   on  this   the day  of 19.. 


Secretary. 


The  leaves  for  receipts  should  be  made  of  good,  strong 
writing  paper,  interleaved  with  light  blotting  paper.  The 
paper  should  be  ruled  with  fifteen  lines  to  the  page  and 
should  have  printed  headings  and  column  rulings  as 
follows : 


Some  associations  put  their  seal  on  each  certifica'te. 

[340] 


BOOKS  AND  BLANKS. 


DATE. 

DUES. 

Interest. 

Premium 

FINES 

RECEIPT. 

.... 

Pass-books  are  sometimes  made  with  twenty-six  instead 
of  fifteen  lines  to  the  page,  but  this  plan  either  makes  the 
book  inconveniently  large  for  carrying  and  handling,  or 
causes  the  rulings  to  be  too  close  for  convenience. 

On  the  front  cover  of  the  book  should  be  pasted  the 
number  of  the  book  and  a  printed  label  as  follows : 

3SS 


In  account  with 

The Building  and  Loan  Association, 

of 

No Shares 

DEPOSIT   ENVELOPES  AND   SLIPS. 

When  a  member  appears  to  make  his  payments  he  fills 
out  a  deposit  ticket  or  slip  and  encloses  it  with  the 
exact  amount  of  his  payment  at  the  proper  place  in  his 
pass-book,  and  hands  it  in.  Some  associations  use  the 
deposit  envelope  instead  of  the  slip,  and  this  is  much  bet- 
ter. The  envelope  is  used  exactly  as  the  slip  except  that 
the  money  is  enclosed  and  sealed  up  in  it,  thus  preventing 
its  being  accidentally  dropped  out  of  the  book  and  caus- 
ing'loss,  delay,  or  error.  The  receiving  officer  calls  off  the 


[341] 


CHAPTER  XXIV. 

number  of  the  pass-book  and  the  amount  of  money  writ- 
ten on  the  slip  or  envelope,  and  passes  all  over  to  the 
other  members  of  the  finance  committee,  one  of  whom 
counts  the  money,  and  another  receipts  for  the  dues  in  the 
pass-book  and  returns  it  to  the  owner,  the  slip  or  envelope 
being  placed  on  file.  When  dues  are  received  in  this  man- 
ner it  is  very  easy  to  check  up  the  accounts  at  the  close 
of  the  meeting.  In  some  associations  the  money  is  simply 
enclosed  in  the  pass-book  without  any  deposit  slip  or 
envelope.  Where  there  is  a  large  membership,  owing  to 
the  numerous  payments  and  the  rush  and  incidental  con- 
fusion, errors  are  likely  to  occur,  both  in  the  money  paid 
in  and  in  the  entries.  Where  deposit  slips  or  envelopes  are 
used  it  is  easy  to  locate  errors  and  to  make  necessary 
corrections. 

Below  are  forms  of  deposit  slips  and  deposit  envelopes : 


DEPOSIT  SLIP. 

The Building  and  Loan  Association. 


19. 


Name 


Book  No. 


No.  of  Shares. 


For weeks 


Dues 

$ 

cts 

Interest 

Premium 

Fines 

Admission  ") 

or          Y    

Transfer      ) 

Book 

Total 

[342] 


BOOKS  AND  BLANKS. 


THE 


BUILDING  ASSOCIATION 
of 


DEPOSIT  ENVELOPE- 

NOTE. — All  moneys  handed  in  to  the  Association  for  Credit  on  Member 
skip  Account,  must  be  enclosed  in  one  of  these  envelopes,  and  the  blanks 
^roper'y  filled  out,  to  prevent  mistakes  or  disputes. 


Bock  No. 


MEMiBER'8  NAME. 


M*k.  M  I 


Dues  for..j>^^. ^...Shares,  for..j^^^^...Week5 


Interest  on  Loan,. 


Premium  on  Loan, w,^u^m,^„m,,i. 


Fines, 


Initiation  Fee,  {50c.  j. 
Pass  Book  "  (25 c. ). 
Transfer     "    (50c. ). 


S 

$ 

.- •$ ~. 


Total  Cash  in  £ny elope, 


Date,. 


Copjrigbt,  18%,  by  ▲.  O. 


[343] 


CHAPTER  XXIV. 

NECESSARY  BOOKS  AND  FORMS. 

The  following  books  and  forms  will  be  found  essential 

in  an  association  numbering  from  250  to  400  members: 

500  Pamphlets — Constitution  and  objects  of  the  Association. 
500  Pass-Books. 

1  Constitution  and  Signature  Book. 
5,000  Deposit  Envelopes  or  Slips. 
1  First  Secretary's  Dues  or  Receipt  Book. 
1  Second  Secretary's  Book. 
1  Treasurer's  Receipt  Book. 
1  Treasurer's  Cash  Book. 
1  Secretary's  Itemized  Cash  Book. 
1  Individual  and  General  Ledger. 
1  Appraisement  Book. 
1  Withdrawal  Book. 

1,000  Warrants  on  Treasurer — Perforated,  numbered,  and  bound. 
Blanks  for  Mortgages,  Bonds,  Notes,  etc.,  as  may  be  required. 
1  Record  Book  for  the  purpose  of  keeping  the  minutes  of  the 
meetings  of  the  association  and  of  the  Board  of  Directors. 

An  association  cannot  well  transact  business  without 
possessing  at  least  the  books  and  forms  enumerated  above. 
But,  in  addition  to  these,  most  associations  use  various 
other  books  and  forms  which  are  found  of  the  greatest 
convenience  and  value  in  the  transaction  of  their  business. 
The  books  and  forms  mentioned  above,  together  with 
many  others,  will  be  found  described  in  the  list  on  next 
page. 

BUILDING  ASSOCIATION   SUPPLIES. 

The  following  is  a  list,  alphabetically  arranged,  of 
books  and  forms  for  building  associations,  prepared  by 
S.  Rosenthal  &  Co.,  Cincinnati,  who  have  made  a  spe- 
cialty of  furnishing  building  association  supplies  for  the 
past  twenty-three  years : 

[344] 


BOOKS  AxND  BLANKS. 

Amendments  to  the  Constitution. — When  amendments  are  made 
to  constitutions  it  is  desirable  that  a  copy  of  the  amendment  be  placed 
in  each  member's  pass-book.  These  amendments  are  printed  on 
gummed  paper  so  that  a  copy  can  be  placed  in  each  pass-book. 

Application  Book  (For  Loans). — Copyright. — Has  columns  for 
date  of  application  for  loan,  name,  amount  of  money  desired,  how 
much  granted,  and  spaces  for  description  of  property,  reports  of 
committees  with  their  signatures,  and  other  important  remarks. 

Application  Book  (For  Loans),  Combined  with  Attorney's 
Reports. 

Application  Book  (For  Membership). 

Applications  for  Money  (Dividends).  Bound  in  ix)ok  form, 
numbered  and  perforated  with  stubs,  or  plain  without  stubs. 
Furnished  unbound  also. 

Applications  for  Money  (Dividends  and  Withdrawals  Combined). 
Bound  or  loose  as  described  above. 

Applications  for  Money  (Withdrawals). — Bound  in  book  form, 
arranged  for  withdrawals  in  full  or  in  part,  numbered  and  perforated 
with  stubs,  or  plain  without  stubs.    Furnished  unbound  also. 

Appraisement  Book. — For  recording  reports  of  appraising  com- 
mittees.   Made  in  all  sizes,  and  arranged  in  conformity  with  law. 

Balance  Sheets. — Showing  entire  business  of  an  association  for  a 
stated  time. 

Bonds  for  OMcers.—  (See  form,  page  260.) 

Cash  Book  and  General  Ledger. — Copyright. — All  entries  to  the 
general  accounts  such  as  interest,  premium,  etc.,  are  posted  when 
made,  and  at  end  of  each  quarter  or  half  year,  or,  at  any  other 
time,  a  complete  balance  can  be  read  off  from  this.  Considerable  time 
is  saved  by  using  this  book. 

Cash  Book  for  Secretaries. — ^With  special  rulings  and  heads  and 
all  necessary  polyforms  and  divisions. 

Cash  Book  for  Treasurer. — Made  in  convenient  pocket  form. 

Certificates  of  Paid-Up  Stock.— With,  ten  stubs  of  $100  each, 
perforated  and  numbered,  with  laws  pertaining  to  same  printed  on 
back. 

Check  Books  (Bank). 

Circulars. — All  styles  and  sizes. 

Collateral  Notes. —  (See  forms.) 

Combination  Check  Journal,  S.  T.   Williams's. — Copyright. 

Constitution  Record  Book  with  Members'  Numerical  Register 
and  Ledger  Index  Combined. — Contains  blank  space  for  recording 
constitution  and  amendments  thereto,  with  blanks  for  signatures  of 

[345] 


CHAPTER  XXIV. 

members  numbered  in  regular  order,  record  of  shares  held  by  each 
member,  place  of  residence,  pass-book  number  of  each  member,  and 
ledger  folio  of  each  member  arranged  in  alphabetical  index. 

Deposit  Blanks. — With  or  without  space  for  advertisements. 

Deposit  Envelopes. — Copyright. — Large  and  small,  perforated. 
Can  be  printed  on  both  sides,  one  side  with  blanks  for  deposits,  and 
the  other  side  for  advertising  purposes.  These  are  very  useful  and 
serve  as  a  check  on  the  receipts. 

Deposit  Fee  Book. — For  keeping  account  of  fees  advanced  by 
members  applying  for  loans. 

Dividend  Books. — For  keeping  dividend  accounts.  The  members' 
numbers  are  printed  in  regular  order,  50  to  a  page,  with  space  for 
names  adjoining,  after  which  follow  spaces  for  amounts  of  dividends 
and  receipts  therefor. 

Dividend,  Report  Record,  and  Reserve  Fund  Book. — Copyright. 

Dividend  Tables. 

Dividend  Warrants. 

Dividend  Withdrawal  Blanks. 

Dodgers. — All  sizes,  English  or  German. 

Dues  Books. — Different  designs  of  weekly,  monthly,  quarterly  and 
semi-annual  dues  books  of  the  most  approved  patterns. 

Election  Tickets. — And  specially  ruled  Tally  Sheets. — Furnished 
to  order. 

Envelopes. — Printed  to  order. 

General  Ledger  and  Cash  Book. 

Index. — Plain  and  voweled. 

Index  {Combination). — See  Constitution  Record  Book 

Individual  Ledgers. — Made  to  order  in  any  desired  form.  We 
have  ledgers  arranged  for  posting  every  week,  month,  half-year, 
etc.  We  make  a  special  Ledger  for  Building  Associations  which  can 
be  used  for  quarterly  and  half-yearly  postings.  We  also  manufacture 
ledgers  with  dates  printed  in,  thus  saving  considerable  time  in  mak- 
ing entries  for  those  secretaries  who  post  receipts  at  each  meeting. 

Letter  Heads. — Printed  to  order. 

Mechanic's  Liens. — (See  forms.) 

Memorials. — Resolutions  of  respect  for  deceased  officers,  directors, 
and  members,  printed  in  neat  and  appropriate  styles. 

Mortgage  Blanks. — (See  forms.) 

Mortgage  Clause  Blanks. — (See  form.) 

Mortgage,  Lease,  and  Insurance  Record. — Ruled  to  show  number, 
amount  of  loan,  expiration  of  lease,  location  of  property,  and  amount 
and  expiration  of  insurance,  as  well  as  cancellation 

[346] 


BOOKS  AND  BLANKS. 

Nightly  Receipt  Books  and  Sheets. — (See  Dues  Book.) 

Notes. — Blank,  or  bound  in  book  form,  drawn  in  conformity 
with  law. 

Note  Heads. — Printed  to  order. 

Notices  to  Members. — Printed  to  order. 

Numbers. — In  sets  of  1  to  500,  and  1  to  1,000  in  different  sizes 
and  gummed. 

Order  Books. — Made  in  all  sizes,  numbered  and  perforated. 

Pads  {Memorandum).     All  sizes. 

Paid-Up  Stock  Certificates. — (See  Certificates  of  Paid-Up  Stock.) 

Paid-Up  Stock  CertiUcate  Ledger  and  Dividend  Books. 

Pamphlets,  in  English  and  German. — Printed  to  order. 

Pass  Books. 

Posters. — All  sizes  to  order,  for  advertising  sales  of  property,  etc. 

Proxy  Blanks. — For  elections  (See  form.) 

Receipts. — Plain  blanks,  or  bound  in  book  form. 

Record  Books. — In  different  styles  with  or  without  irrdex.  Also 
printed  records  to  order. 

Reports. — Semi-annual,  annual,  etc.,  printed  in  any  form. 

Share  Account  Books. 

Seals. 

Secretary  Books. — For  the  First  and  Second  Secretaries.  The 
best  designs  in  this  line.  Special  attention  is  called  to  the  new  13 
and  26  week  books,  made  orr  the  most  labor-saving  plan.  Second 
Secretary  books  in  different  styles. 

Show  Carrf.y.- -Signs  for  place  of  meeting. 

Solicitor's  Reports. 

Subscription  Blanks. — For  new  associations. 

Subscription  Books. — Stock. 

Tally  Books  and  Blanks. — Generally  used  by  the  Second  Secretary 
or  Finance  Committee. 

Tally  Sheets. — For  elections. 

Transfer  Book. — Stock. 

Treasurer's  Cash  Books. — Made  especially  for  treasurers  in  con- 
venient pocket  form. 

Treasurer's  Receipt  Books. — Regular.  Also,  extra  ruled  and 
printed,  with  13  weeks  (three  months,)  receipts  to  a  page,  and  space 
for  date,  signature,  amount,  and  account  for  overs  s>iid  shortages 
in  cash  received. 

Vos's  Indizndual  Record  and  Ledger. 

Withdrawal  Blanks. — In  pads  or  book  form. 

[347] 


CHAPTER  XXV. 


Juvenile  Savings.* 


Owing  to  the  prominence  given  to  the  movement  in 
Elmira,  N.  Y.,  by  Mr.  McEwan,  of  the  New  York  Eve- 
ning Post,  some  two  years  ago,  inquiries  have  come  from 
such  divergent  points  as  Los  Angeles,  Seattle,  Birming- 
ham, Ala.,  and  Fitchburg,  Mass.,  clearly  showing  that 
interest  in  this  subject  is  not  local. 

For  the  benefit  of  others  interested  we  will  attempt  to 
outline  the  operation  of  a  juvenile  department  as  an  ad- 
junct of  a  savings  and  loan  association. 

The  scheme  is  not  new.  Twenty  years  or  more  ago 
Prof.  Elias  J.  Beardsley,  principal  of  one  of  the  Elmira 
schools,  operated  a  savings  department  successfully,  until 
brought  to  the  attention  of  the  Board  of  Education  with 
a  view  to  its  extension  throughout  all  the  city  schools, 
when  it  was  found  that  it  contravened  the  state  savings 
bank  law. 

The  school  savings  system  was  not  extended  then, 
neither  was  any  effort  made  to  secure  legislation  in  aid 
of  this  commendable  addition  to  the  school  curriculum; 


Prepared  by  Mr,  H,  M.  Clark. 

[348] 


JUVENILE  SAVINGS. 

and  Prof.  Beardsley  was  even  compelled  to  discontinue 
its  operation  in  his  own  school. 

The  seed  thus  sown  did  not,  however,  fall  wholly  on 
barren  soil,  for,  although  many  years  elapsed  since  the 
failure  of  his  plan,  the  subject  recurred  from  time  to  time, 
and  at  a  meeting  of  the  directors  of  an  Elmira  associa- 
tion it  was  discussed  in  the  presence  of  Clay  W.  Holmes, 
a  loan  association  enthusiast  of  wide  experience,  who 
recognized,  at  once,  the  beneficial  features  of  a  system 
designed  to  stimulate  thrift  and  the  savings  habit  in  chil- 
dren. He  drafted  a  bill,  which  ultimately  became  a  law, 
permitting  New  York  savings  and  loan  associations  to 
operate  children's  savings  departments.  In  the  framing 
of  the  law  he  had  recourse  to  the  knowledge,  ripe  experi- 
ence and  wise  counsel  of  William  Fleming,  then  Secretary 
of  the  East  Rutherford  (N.  J.)  association,  the  first  in 
America,  we  believe,  to  carry  this  plan  to  complete 
success. 

The  Corning  (N.  Y.)  association  was  the  first  to  in- 
augurate a  juvenile  department  under  the  new  law.  The 
earnestness  of  Frank  D.  Kingsbury,  one  time  President 
of  the  United  States  League  of  Building  and  Loan  Asso- 
ciations, and  the  cheerful  co-operation  of  his  associates 
assured  a  success  beyond  anticipation. 

Corning  is  a  city  of  15,000  inhabitants,  with  no  other 
savings  institution  than  the  Co-operative.  Accordingly, 
a  clear  field  was  presented  for  trying  out  the  experiment. 
Its  success  was  immediate;  the  receipts  for  the  first  six 
months  exceeded  $5,000;  from  a  membership  of  500  it 
increased  in  five  years  to  877,  with  deposits  of  $33,000. 

' [3491 


CHAPTER  XXV. 

A  stranger  in  Corning  on  children's  day  might  imagine 
the  Pied  Piper  of  Hamlin  was  here  plying  his  craft  and 
inveigling  all  the  young  folks  of  the  city  through  the 
doors  of  the  association.  Coming  pell-mell,  they  swarm 
up  the  steps  of  the  office,  each  child  carrying  a  small 
steel  bank  to  be  opened  and  its  contents  counted  and 
entered  in  a  pass-book.  A  Corning  kid  without  a  bank  is 
an  anomaly.  About  the  first  act  upon  the  birth  of  a  child 
is  to  provide  it  with  a  bank,  pass-book  and  certificate  of 
membership  in  the  children's  department.  We  do  not 
believe  the  statement  is  overdrawn;  for  frequently  the 
writer  has  received  the  reply,  ''One  day  old,"  in  answer 
to  the  usual  question  as  to  the  age  of  the  new  member. 

However,  the  fact  remains  that  nowhere  in  the  world 
is  there  a  more  thriving  institution  of  its  kind  than  the 
juvenile  department  of  the  Corning  association.  The 
motives  which  lead  to  the  establishing  and  operation  of 
a  children's  saving  department  in  a  community  are  not 
sordid  in  the  slightest  degree ;  they  arise  from  pure  altru- 
ism, requiring  a  deal  of  unremunerated  labor  and  the 
exercise  of  a  large  amount  of  patience. 

Each  child  on  joining  is  provided  with  a  small  steel 
bank,  depositing  one  dollar  as  security  for  its  safe  re- 
turn (the  association  retaining  the  master-key),  also  a 
pass-book,  with  number  corresponding  to  that  of  the 
bank,  wherein  is  entered,  from  time  to  time,  the  amount 
of  the  deposits  and  withdrawals. 

A  day  is  set  apart  each  month  as  children's  day;  care 
being  taken  to  choose  a  day  whereon  nothing  else  of  im- 
portance is  liable  to  occur. 

[350] 


JUVENILE  SAVINGS. 

Four  or  five  receiving  tellers,  volunteering  their  serv- 
ices, are  on  hand,  whose  business  it  is  to  open  the  banks 
presented,  count  the  cash,  make  a  minute  of  the  amount 
on  a  check-slip  and  on  a  colored  slip  on  which  is  written 
the  number  of  the  bank  and  pass-book. 

The  colored  slip  is  given  to  the  child,  who  hands  it 
with  its  pass-book  to  President  Kingsbury,  or  his  proxy, 
who  selects  the  card  having  the  child's  name  and  number 
of  his  bank  (this  card  being  the  ledger  account  with  that 
child,  and  a  duplicate  of  the  entries  in  the  pass-book). 
The  card,  slip  and  pass-book  are  passed  on  to  the  secre- 
tary who  enters  the  amount  on  a  numbered  sheet,  the  slip 
is  spindled  and  the  deposit  entered  in  the  pass-book,  which 
is  then  returned  to  the  child.  Each  cashier  issues  a  dis- 
tinctively colored  slip,  so  that  an  error  may  be  readily 
located  when  the  cash  is  balanced  after  banking  hours. 
The  receipts  of  the  Corning  juvenile  department  average 
$750  on  children's  day. 

A  year  later  juvenile  branches  were  established  in  the 
two  Elmira  associations.  Here  they  were  brought  in 
competition  with  a  Penny  Provident,  a  savings  bank, 
and  two  other  institutions  catering  to  children's  accounts. 
Accordingly,  while  they  have  had  a  measure  of  success 
and  a  steady  growth  from  the  beginning,  they  have  fallen 
short  of  the  phenomenal  success  of  Corning  and  East 
Rutherford. 

Added  impetus  has  been  given  to  the  movement  in 
Elmira  by  the  introduction  of  the  system  in  the  public 
schools. 

The  success  of  such  extension  of  the  juvenile  depart- 

[351] 


CHAPTER  XXV. 

ment  is  perhaps  best  gathered  from  the  following  por- 
tion of  the  address  to  the  shareholders  of  the  Chemung 
Valley  Mutual  Loan  Association  by  its  President,  Clay 
W.  Holmes: 

In  1905  your  President,  then  Chairman  of  the  Legislative  Com- 
mittee of  the  New  York  State  League  of  Savings  and  Loan  Asso- 
ciations, prepared  an  amendment  to  the  Savings  and  Loan  law, 
known  as  the  Juvenile  Savings  Act,  and  secured  its  passage  by  the 
Legislature.  This  act  provided  that  the  minor  could  transact  busi- 
ness with  the  Savings  and  Loan  Association  without  the  interfer- 
ence of  a  guardian  or  parent.  The  purpose  of  this  act  was  to  relieve 
the  Association  from  the  annoying  and  uncertain  conditions  of  exist- 
ing laws,  and  enabling  a  minor  to  deposit  his  savings  without  let  or 
hindrance  and  withdraw  them  at  pleasure  on  the  same  independent 
basis  as  grown  people.  This  act  has  been  of  great  advantage  in 
many  ways.  For  a  long  time  the  author  of  this  act  had  studied  its 
application  to  the  educational  benefit  of  children,  and  when  he  found 
that  the  present  able  Superintendent  of  Schools,  Mr.  D.  C.  Bliss, 
was  an  earnest  student  along  the  same  lines  a  plan  was  devised  for 
its  trial  in  the  public  schools.  The  matter  was  submitted  to  the 
Board  of  Education  and  heartily  approved.  An  explanatory  circular 
was  prepared  and  submitted  to  the  parents  on  Friday,  November  4, 
1910,  and  on  the  following  Alonday  the  teachers  in  the  ten  grammar 
schools  of  Elmira  received  from  such  pupils  as  desired  to  join  the 
Juvenile  Department  their  deposit  envelopes.  It  was  hardly  ex- 
pected that  many  of  the  children  would  be  sufficiently  interested  on 
the  first  day  to  start  an  account.  Much  was  our  surprise,  therefore, 
to  receive  1,142  envelopes,  which  meant  that  one-third  of  all  the 
pupils  responded  on  the  first  call.  Every  Monday  since,  regular  as 
a  clock,  the  children  have  produced  their  little  envelopes,  and  at  this 
time  over  1,700  are  enrolled,  the  exact  number  being  1,730  at  the 
close  of  the  year.  Over  100  have  joined  in  January.  Believing  that 
it  will  be  of  interest  to  the  parents,  as  well  as  the  general  public, 
some  statistics  are  here  given  to  show  how  the  plan  is  working. 
Up  to  the  Christmas  vacation  there  were  seven  Monday  deposits, 
and  the  total  deposits  of  those  days  numberer  6,797,  of  which  num- 
ber 4,965  did  not  exceed  25  cents,  made  up  as  follows :  One  hun- 
dred and  eighteen  of  1  cent  each,  61  of  2  cents,  55  of  3  cents,  37  of 
4  cents,  1,011  of  5  cents,  1,581  between  5  and  10  cents,  2,102  between 
10  and  25  cents,  leaving  a  balance  of  1,832  deposits  which  exceeded 

[352] 


JUVENILE  SAVINGS. 

25  cents  each.  These  figures  clearly  prove  that  the  plan  is  a  great 
success  educationally,  and  that  the  belief  of  the  promotors  was  cor- 
rect. But  let  us  go  still  further  and  note  the  total  of  the  seven 
weeks  and  see  what  the  aggregate  amounts  are.  There  were  380 
having  less  than  25  cents,  280  between  25  and  50,  207  between  50  and 
75,  and  162  between  75  and  $1.00,  a  total  of  1,029  having  less  than 
$1.00,  leaving  501  who  exceeded  $1.00.  Now,  as  a  financial  proposi- 
tion one  could  hardly  call  such  figures  promising  for  profit  to  any 
institution,  in  fact,  it  costs  more  for  the  clerical  help  to  handle  the 
large  number  of  accounts  than  the  money  received  will  earn  in  in- 
terest for  the  Association,  but  when  one  stops  to  consider  that  "as 
the  twig  is  bent  the  tree  inclines,"  there  is  much  in  it.  Some  day 
these  children  will  be  grown  up,  and  when  they  come  to  graduation 
they  have  not  only  learned  how  to  read  and  do  cube  root,  but  also 
the  greater  lesson  of  self-denial  and  saving  which  will  lead  them  to 
continue  their  saving  habit.  Another  interesting  proof  of  the  possi- 
bility of  such  education  is  that  the  children  of  very  tender  age  seem 
to  take  hold  of  the  plan  more  freely  than  older  pupils,  as  is  shown 
in  these  figures.  The  ages  of  the  present  members  is  as  follows: 
One  hundred  five,  five  years;  202,  six  years;  216,  seven  years;  211, 
eight  years;  194,  nine  years;  187,  ten  years;  148,  eleven  years;  162 
twelve  years;  121,  thirteen  years;  95,  fourteen  years;  38,  fifteen 
years;  10,  sixteen  years;  and  2,  seventeen  years.  The  list  includes 
760  boys  and  770  girls.  There  are  many  other  interesting  features 
connected  with  this  work,  but  these  facts  are  given  just  to  illustrate 
what  can  be  done  when  children  take  hold. 

Your  President  regards  this  as  one  of  the  greatest  successes  ever 
achieved  in  the  Savings  and  Loan  Association  work,  and  believes 
that  it  is  but  the  beginning  of  a  great  and  universal  movement  along 
the  line  of  savings  educational  work  throughout  the  country.  The 
trouble  heretofore  has  been  to  find  a  plan  which  would  work.  The 
Elmira  plan  works  magnificently  and  beyond  the  wildest  hopes  of 
its  promotors,  and  the  Chemung  Valley  has  turned  the  trick  for  the 
benefit  of  the  world  at  large.  Educate  the  child,  and  the  man  will 
save  without  asking.  Save  the  pennies  and  the  dollars  will  take  care 
of  themselves. 

The  plan  followed  in  the  school  savings  plan  is  as  fol- 
lows :  On  Monday  morning  of  each  week  the  pupil  de- 
posits with  his  teacher  such  sum  as  he  desires.  The  money 
is  put  in  an  envelope,  which  is  sealed,  and  the  depositor's 

[353] 


CHAPTER  XXV. 

name,  number,  room  and  amount  of  deposit  written 
thereon,  either  by  the  teacher  or  by  the  depositor,  if  com- 
petent. 

The  envelopes  are  collected  from  the  several  rooms  and 
delivered  to  the  principal,  whose  duty  it  is  to  see  that  they 
reach  the  association  which  receives  the  deposits  in  the 
name  of  the  pupil,  who  thereby  becomes  a  fuUfledged 
member  of  the  juvenile  department.  The  amount  con- 
tained in  each  envelope  is  credited  in  a  pass-book.  Inter- 
est is  allowed  on  all  sums  of  one  dollar  at  the  rate  of 
4  per  cent  per  annum.  Dividends  are  credited  in  January 
and  July,  and  entered  in  the  pass-books  in  red  ink,  to 
catch  the  attention. 

The  pass-book  is  retained  by  the  teacher,  although  a 
pupil  may  take  it  home  to  exhibit  to  his  parents  at  any 
time  they  wish  to  see  it;  but  the  book  is  returned  forth- 
with to  the  teacher  for  safe-keeping. 

Should  a  pupil  wish  to  withdraw  any  of  his  savings, 
he  may  apply  in  person  at  the  office  of  the  association 
with  his  pass-book  and  receive  his  money.  Such  with- 
drawals must  be  in  sums  of  one  dollar  or  multiples 
thereof.  When  a  pupil  graduates  or  leaves  school  he  may 
still  continue  his  deposits  at  the  office  of  the  association, 
on  the  same  account,  at  his  option. 

If  these  juvenile  savings  were  derived  merely  from 
money  given  to  the  child  by  doting  parents  and  admiring 
relatives  the  scheme  would  still  be  lacking  an  essential 
educational  element.  Our  observations  have  brought  to 
light  the  fact  that  children,  spurred  on  by  an  ambition  to 
save,  are  induced  to  earn  the  money  themselves.    In  win- 

[354] 


JUVENILE  SAVINGS. 

ter  they  run  errands,  clean  sidewalks,  care  for  furnaces, 
and  do  such  odd  jobs  as  always  await  an  active  wide- 
awake boy.  A  prolific  source  of  juvenile  earnings  is  sell- 
ing newspapers  and  magazines.  In  summer  there  are 
lawns  to  mow,  gardens  to  weed.  Some  keep  chickens 
and  sell  eggs.  Two  young  girls,  who  live  on  a  farm,  pick 
berries  and  other  fruits,  being  paid  for  their  work. 

There  is  an  orphans'  home  in  Elmira,  whose  boys  and 
girls  are  each  allotted  a  garden  plot  and  permitted  to 
have  and  use  as  they  wish  the  proceeds  of  all  they 
raise.  Fifteen  or  more  of  these  embryo  agriculturists 
have  their  banks  and  bank  accounts  in  a  juvenile  depart- 
ment. 

There  is  that  feature  apart  from  the  mere  depositing 
and  saving  which  furnishes  a  concrete  illustration  of  the 
educational  aspect  of  the  system;  i.  e.,  the  withdrawals. 
It  would  indeed  be  a  shallow  pretense  if  the  child  were 
taught  to  save  and  nothing  more  in  that  connection.  To 
inculcate  the  purpose  of  savings  and  the  wise  uses  to 
which  they  may  be  put  is  not  the  least  beneficial.  Many 
withdraw  the  money  which  they  have  saved  to  buy  cloth- 
ing; others,  school  books;  one  recently  withdrew  to  pay 
his  doctor's  bill ;  another,  to  purchase  the  materials  for  a 
''raw  dog."  I  was  sorry  for  one  lad.  He  had  a  fine 
paper  route  and  had  saved  $40.  His  lip  quivered  as  he 
replied  to  the  inquiry  usual  in  such  cases:  ''Father  has 
a  note  to  meet."  It  is  to  be  regretted  that  he  became  dis- 
couraged, turned  in  his  bank  and  is  not  saving  now.  Two 
girls  made  their  first  payment  on  a  new  piano  from  their 
joint  savings.    A  little  miss  presented  her  pass-book,  say- 

[355] 


CHAPTER  XXV. 

ing,  "I  want  to  draw  out  my  money  because  mamma 
has  to  make  a  payment  on  the  house." 

It  has  developed  in  certain  instances  that  the  bank, 
ostensibly  in  the  name  of  the  child,  is  actually  used  as 
the  family  depository,  and  the  account  drawn  upon,  from 
time  to  time,  in  cases  of  domestic  emergency. 


M^no 


CHAPTER  XXVI. 


Advertising. 


If  building  and  savings  associations  have  a  great 
moral  obligation — outside  of  the  honest  and  efficient 
administration  of  the  funds  entrusted  to  them — then  it  is 
the  promulgation  of  one  maxim :   "Save  money T 

This  sounds  like  a  somewhat  homely,  commonplace 
proposition.  But  observe  how  very  cleverly  and  pointed- 
ly the  great  Scotchman,  Burns,  expresses  the  same  idea: 

Save  Money  1 
Not  for  to  hide  it  in  a  hedge, 
Not  for  a  train  attendant, 
But  for  the  glorious  privilege 
Of  being  independent. 

To  be  independent!  That  is  the  great  wish,  the  all- 
absorbing  longing  of  every  person.  ''Economic  depend- 
ence is  the  basis  of  all  slavery — social,  political  or  other- 
wise !"  So  says  a  great  philosopher,  and  the  truth  of  this 
axiom  cannot  be  denied.  World  movements  are  being 
built  upon  the  foundation  of  this  truth,  with  the  aim 
of  delivering  mankind  from  the  bane  of  economic 
dependence. 

And  yet  the  fact  remains,  the  individual,  depending 
upon  his  own  resources,  has  but  one  recourse  to  escape, 

[357] 


CHAPTER  XXVI. 

to  some  extent,  this  curse  of  economic  dependence,  and 
that  is  to  "Save  money!" 

Looking  at  this  from  the  viewpoint  of  advertising, 
it  becomes  at  once  clear,  what  a  strong  advertising  appeal 
every  building  and  savings  association  has  to  every 
member  of  its  particular  community. 

Large  as  the  activities,  the  influences,  the  good  work 
of  the  building  and  savings  associations  at  the  present 
time  may  appear  in  comparison  with  their  field  of 
endeavor,  they  have  only  just  begun  to  scratch  the  sur- 
face of  this  field. 

From  this  fact  their  normal  obligation,  to  advertise,  is 
born.  Everything,  new  and  good  or  better,  must  be 
made  known  to  the  world.  There  is  no  good  in  unknown 
good. 

A  handbook  on  the  workings,  the  promotion  and  the 
betterment  of  building,  loan  and  savings  associations 
is  therefore  hardly  complete  without  a  chapter  on 
advertising. 

Building,  loan  and  savings  associations,  as  organized 
in  the  United  States,  are  the  most  effective,  the  safest, 
and  the  most  remunerative  savings  institutions  of  the 
world.  They  are  recognized  as  such  by  the  people  and  by 
the  state.  Advertising  them  as  such — in  all  possible  forms 
of  advertising — is  necessary,  not  only  as  a  moral  obliga- 
tion, or  as  a  business  proposition,  but  also  as  a  matter  of 
self-preservation. 

No  matter  how  great,  or  how  beneficial,  or  how  strong 
any  institution  as  such  may  be,  it  ever  depends  upon 
progress  for  its  existence.  To  stand  still  means  retrogres- 

[358] 


ADVERTISING. 

sion  everywhere.  Building  associations  now  existing 
must  extend  their  membership  and  their  usefulness;  new 
associations  must  spring  up  everywhere  and  dem- 
onstrate the  good  of  the  cause.  So  it  is  willed  by  the 
inexorable  law  of  the  survival  of  the  fittest. 
Therefore :   Let  us  advertise ! 


The  limitations  of  our  article  make  it  impossible  to 
enter  into  a  detailed  dissertation  on  the  ''science"  of 
advertising.  And,  moreover,  such  a  dissertation  is  super- 
fluous, and  would  fail  to  achieve  results.  It  is  quite 
impossible  to  establish  fast  and  rigid  rules  for  success- 
ful advertising,  but  there  are  a  number  of  hints,  based 
upon  solid  thought  and  experience,  which  will  well  serve 
to  pave  the  way  for  any  beginner  in  this  subtle  art. 

WHY  SHOULD  YOU  ADVERTISE? 

Because — There  is  not  a  person,  may  his  income  be 
ever  so  modest,  barely  reaching  the  necessities  of  life, 
but  who  ought  to  save  money.  And  again,  there  is  no 
person  in  this  world  but  who  is  affected  by  advertising. 

Because — Advertising  impresses  your  name,  your 
object,  your  merit,  your  meeting  place  and  date  of  meet- 
ing upon  many  prospective  members. 

Because — It  increases  your  membership  and  the  good 
you  are  doing. 

Because — Increased  membership  and  increased  num- 
bers of  shares  mean  lower  cost  of  administration  per 
share,  thus  increasing  your  net  profits. 

Because — The  purpose  of  advertising  is  to  influence 

[359] 


CHAPTER  XXVI. 

the  human  mind,  trying  to  teach  people  to  believe  in 
you  and  in  the  institution  you  represent.  The  whole 
business  world  rests  upon  a  foundation  of  confidence. 
It  is  impossible  to  do  business  successfully  when  con- 
fidence either  cannot  or  is  not  established,  or  has  been 
abused  and  is  gone.  Lack  of  confidence  in  any  worthy 
business,  not  only  building,  loan  and  savings  associations, 
is  generally  due  to  ignorance  and  the  fact  that  the  con- 
fidence-lacking business  is  not  well  known.  Publicity  is 
the  greatest  foe  to  ignorance.  Advertising  gives  the 
people  at  large  knowledge  about  you,  the  merits  of  your 
institution  and  your  business.  It  is  the  greatest  force  in 
the  interest  of  confidence.  It  follows  that  advertising,  to 
be  advertising  at  all,  must  be  educational. 

HOW  SHOULD  YOU  ADVERTISE? 

Advertising  is  asking  that  many  people  do  specific 
things. 

Look  your  fellow-man  straight  in  the  eyes  and  tell  him 
that  in  your  association  you  have  something  that  he,  too, 
ought  to  have,  and  ask  him  to  come  and  get  it — that  is 
advertising. 

Anything  that  is  worth  .advertising  at  all  is  worth 
advertising  well.  Any  proposition  which  is  to  appeal 
to  thousands  of  prospective  members  deserves  mature 
thought  and  utmost  care  in  preparation. 

With  regard  to  advertising  mediums,  it  may  be  said, 
that  in  the  case  of  building  associations  the  daily  and 
weekly  newspapers  deserve  the  first  consideration. 
Advertising  by  circulars,  booklets  and  other  mail  matter 

[360] 


ADVERTISING. 

bears  the  character  of  an  individual  appeal  and  must  be 
supplementary  to  the  newspaper  advertising.  Advertis- 
ing by  posters,  hangers  and  street  car  signs  is  very 
beneficial  and  in  some  localities  may  be  indispensable. 
But  whatever  medium  or  mediums  are  selected  all  adver- 
tising should  be  carefully  planned  in  advance  and 
judiciously  followed  up.* 

THE  PREPARATION   OP  ADVERTISEMENTS. 

Persons  charged  with  the  preparation  of  advertise- 
ments should  always  keep  before  their  minds  these  facts : 
Certain  forms  have  identical  effects  upon  the  majority  of 
people.  Certain  color  combinations  may  always  be  relied 
upon  to  attract  the  eye  and  the  mind,  while  other  com- 
binations never  fail  to  repel.  In  the  same  manner  certain 
words  and  formations  of  words  into  sentences  are  pleas- 
ing, certain  others  displeasing,  not  only  to  individuals, 
but  to  the  majority  of  individuals. 

The  first  rule  of  the  writer  of  advertisements  therefore 
must  be  to  avoid  all  that  is  repelling  and  displeasing  in  the 
wording  and  the  make-up  of  his  advertisement.  Adver- 
tisements must  be  attractive  and  agreeable  to  fulfill  their 
mission.  On  the  other  hand,  it  is  also  wise  to  avoid 
any  attempt  to  be  humorous.  A  humorous  advertisement 
is  at  best  a  ''comical"  one,  and  is  certain  to  fall  short  in 
its  effect.     If  you  want  to  induce  a  man  to  do  business 


•  We  would  recommend  to  associations  the  regular  and  systematic  employ- 
ment of  such  expert  service  for  the  use  of  building  association  advertising  as 
can  be  obtained.  We  believe  employment  of  a  regular  service  is  essential,  and 
in  this  connection  would  respectfully  call  the  reader's  attention  to  the  advertising 
service  rendered  in  connection  with  the  American  Building  Association  News. 

[361] 


CHAPTER  XXVI. 

with  you,  you  must  interest  him,  not  amuse  him.  Busi- 
ness is  not  a  matter  of  jest  or  levity.  It  is  a  matter  of 
sense,  system  and  seriousness,  and  it  will  never  pay  you 
to  view  it  from  a  different  standpoint. 

Advertisements  reflect  the  dignity  and  the  strength  of 
character  of  the  advertiser.  This  is  true  of  the  advertise- 
ments of  any  business,  but  applies  with  increased  force 
to  the  advertising  of  financial  institutions.  The  public 
expects  dignity  of  an  institution  that  solicits  the  custody 
of  funds.  Therefore  be  honest  and  convincing  in  your 
advertising.  It  is  easy  to  employ  superlatives,  high- 
sounding  phrases  and  large  assertions,  but  it  is  not  good 
advertising.  It  is  much  better  to  state  facts  in  plain  and 
vigorous  language,  and  to  be  terse  in  style.  Set  forth  in 
a  clear,  straightforward  way  whatever  advantages  you 
may  enjoy  and  can  offer  to  others,  but  take  care  not  to 
make  promises  which  later  on  may  embarrass  you  if 
called  upon  to  make  good. 

Newspaper  advertising,  to  be  effective,  must  be  per- 
sistent. An  occasional  notice  has  little,  if  any,  value.  It 
may  take  a  campaign  of  several  years  to  produce  con- 
fidence in  the  public  mind  that  your  association  is  reliable 
and  does  what  it  promises.  It  has  been  truthfully  said, 
however,  "keeping  everlastingly  at  it  brings  success." 
Persistence  is  a  jewel  of  rare  value  in  any  undertaking, 
and  particularly  so  in  the  advertising  field. 

Our  advertisements  should  incite  thrift,  urge  economy, 
and  appeal  to  the  home  instinct.  Such  objective  ends  will 
tend  to  inspire  confidence  in  the  institution  itself  on  thq 
part  of  the  general  public.     Of  all  occupations  there  is 

[362] 


ADVERTISING. 

none  nobler  than  ours.  "The  American  home"  is  in 
truth  "the  safeguard  to  American  liberties,"  and  worthy 
of  all  respect  and  honor  should  those  be  who  are  assisting 
in  this  great  work,  of  establishing  American  homes, 
wherein  peace,  righteousness  and  happiness  dwell  and 
wherein  the  children  are  taught  those  principles  which 
will  perpetuate  justice  and  liberty. 

Advertising's  greatest  value  is  accumulative.  Sporadic 
or  spasmodic  efforts  have  little  value  and  really  constitute 
a  waste  of  money.  Advertisements  should  always  be  up 
to  the  minute.  That  gives  them  life,  interest  and  influence. 

Advertisements  in  newspapers  should  be  changed 
frequently,  at  least  as  often  as  once  each  week,  and.  they 
should  always  state  in  substance  your  business  and  give 
your  business  address.  They  should  be  carefully  written, 
great  care  being  exercised  as  to  the  language  used.  They 
really  should  be  written  when  one  is  in  a  good  frame  of 
mind.  One  in  poor  spirits,  dejected  or  angry,  is  not  the 
person  to  write  advertisements  which  purpose  is  to  buy 
and  sell  money.  He  cannot  but  impart  his  feelings  to  his 
composition,  and  this  might  not  be  the  most  beneficial 
to  the  association. 

When  well  and  feeling  good  write  a  number  of  notices 
and  then  use  them  as  occasion  demands.  You  will  find 
this  suggestion  very  helpful.  Besides,  the  more  notices 
you  write,  the  better  they  will  become,  and  the  more  you 
will  have  to  select  from.  The  writer  has  copy  ready  for 
at  least  five  years  to  come,  and  as  new  ideas  come  to  him, 
in  thinking  over  the  business,  or  when  reading  the  Ameri- 

[363] 


CHAPTER  XXVI. 

can  Building  and  Loan  Association  News,    a    splendid 
paper,  they  are  jotted  down  and  in  time  duly  developed. 


TECHNICAL  DATA. 

It  is  impossible  to  establish  rigid  rules  for  advertising. 
Many  roads  lead  to  Rome.  Close  appliance,  study  and 
observation,  together  with  practical  experience,  are  the 
best  teachers.  But  there  is  a  great  deal  of  technical 
data,  which  is  of  great  value  to  every  advertiser.  In 
the  following  we  endeavor  to  make  this  information 
accessible : 

TECHNICAL   DATA    ABOUT    ADVERTISING. 
PRINTING. 

The  basis  of  measurement  of  advertising  space  in  newspapers 
and  periodicals  is  the  agate  line.  The  word  "agate"  refers  to  the 
title  of  the  smallest  type  generally  used  by  newspapers. 

Eight  agate  lines  constitute  one  newspaper  square;  14  agate  lines 
equal  one  inch. 

(It  ought  to  be  observed,  that  newspaper  agate  differs  from  the 
general  printers'  agate,  in  so  far,  that  newspaper  agate  is  cast  upon 
SVt  points,  while  regular  agate  is  cast  upon  5^  points.  See  explana- 
tion of  point  system.) 

Some  newspapers,  especially  the  German,  use  the  nonpareil  (6 
points)  measurement;  12  lines  nonpareil  equal  one  inch. 

The  ordinary  width  of  a  newspaper  column  is  13  picas,  or  2% 
inches.  The  column  width  of  standard  magazines  is  16  picas,  or 
22/3  inches. 

THE  PRINTERS'   POINT  SYSTEM. 

The  typefounders'  unit  of  type  measurement  is  the  point.  One 
point  is  .0139  of  one  inch.  The  printers'  unit  of  measurement  is  the 
pica.    One  pica  equals  12  points  and  6  picas  equal  1  inch. 


[364] 


ADVERTISING. 

1  point=12  to  pica.  6  point=Nonpareil.  18   point=Great   primer. 

2  point=^fi  to  pica.  7  points  Minion.  24  point=Double  pica. 

3  point^-4   to  pica.               8  point=Brevier.  30  point=5  line  nonpareil. 
854    point=BriIliant.             9  point = Bourgeois.  86  point=8  line  pica. 

4  point^S  to  pica.  10   point=Long  primer.  42  point=7  line  nonpareil. 
454    point= Diamond.  11   point=Small  pica.  48  point=4  line  pica. 

5  point=PearI.  12  point=Pica.  60  point=5  line  pica. 
654   point=Afi:ate.  14   point=EnKlish.  72  point=6  line  pica. 

PAPERS. 

The  selection  of  paper  for  advertising  matter  of  any  kind,  be  it 
stationery,  circulars,  booklets  or  catalogues,  is  of  fundamental  im- 
portance, as  the  same  contribute  a  large  share  to  the  impression 
made  by  any  printed  matter. 

In  general  the  determining  factors  are  (1)  illustration,  (2) 
subject-matter,  (3)  impression  desired. 

In  our  limited  space  it  is  impossible  to  give  a  detailed  description 
of  the  various  sizes,  styles  and  qualities  of  paper  manufactured. 

Paper  is  quoted  by  the  "Ream,"  The  modern  ream  contains  20 
quires  of  25  sheets  each  or  500  sheets  altogether. 

NEWS  PAPER. 

News  paper  is  the  most  ordinary  of  papers  and  is  made  entirely 
of  wood  pulp.  It  comes  only  in  one  color — White.  If  tinted,  it  is 
called  Poster  paper  and  comes  in  various  colors.  The  stock  sizes  of 
newspaper  ar« :  22x30,  22x32,  22x35,  24x35,  24x36,  25x38, 
26x38,  26x40,  28,x42,  29x43,  29x44,  30x44,  32x44,  35x44, 
35  x  48,  36  X  48.  The  weight  varies  from  25  pounds  to  65  pounds  per 
ream.    The  basis  generally  is  24  x  36 — 32  pounds  per  ream. 

Outside  of  the  printing  of  newspapers,  this  grade  of  paper  is  used 
for  dodgers,  hand  bills,  placards,  etc.,  which  are  to  be  printed  in  very 
large  quantities  and  distributed  promiscuously. 

BOOK    PAPER. 

Book  Paper  comes  in  different  qualities,  finishes  and  tints.  It 
varies  from  plain  machine  finished  (M.  F.),  sized  and  calendared 
(S.  &  C),  sized  and  supercalendared  (S.  &  S.  C.)  for  text  and 
engravings,  which  print  readily,  to  the  most  highly  finished  stock, 
and  all  kinds  of  antique  and  special  finishes,  for  any  sort  of  art 
printing. 

Coated  Paper,  Enameled  Paper,  Plate  Paper,  are  subdivisions  of 
book  paper.  These  papers  all  have  a  finish,  which  adapts  them  to 
fine  half-tone  printing,  color  work,  etc. 

[365] 


CHAPTER  XXVI. 

Book  paper  of  the  cheaper  grade  is  used  for  hand  bills,  etc.,  of 
limited  editions.  Also  for  cheap  pamphlets,  leaflets,  etc.  The  better 
grades  go  into  booklets,  circulars  and  cheap  catalogues.  Enameled 
and  Plate  paper  must  be  used  in  Catalogs,  where  half-tone  illustra- 
tions are  to  be  inserted,  also  for  fine  color  work. 

WRITING    PAPER. 

Writing  paper  is  used  for  all  kinds  of  commercial  forms,  which 
are  impregnable  to  fluid  ink.  Plain  White  Writing,  Colored  Writing, 
Bond  Papers,  Linen  Papers,  Ledger  Papers,  all  come  under  this 
head.  Quality  and  finish  vary  very  much.  The  right  selection  of 
writing  papers  for  commercial  forms  is  very  important. 

Sizes  of  Writing  Papers  are  as  follows : 

Cap     14x17         Double  Demy,  Broad 21x32 

Crown    15  X  19        Double  Demy,  Long 16x42 

Demy 16x21        Imperial    23  x  .31 

Folio     17  x  22         Double  Medium,  Broad 23  x  36 

Medium 18x23         Double  Medium,  Long 18x46 

Royal   19x24        Double  Royal,  Broad 24  x  38 

Double    Cap 17  x  28        Double  Royal,  Long 19  x  48 

Super    Royal 20x28 

Writing  Paper  is  used  for  all  kinds  of  commercial  and  legal 
forms,  letter  heads,  envelopes,  circulars,  announcements,  invitations, 
bank  checks,  etc. 

COVER    PAPER. 

Cover  Papers  offer  the  greatest  range  of  all  kinds  of  paper,  for 
they  comprise  every  conceivable  shade  and  color  which  can  be  pro- 
duced. The  uses  of  these  stocks  seem  to  be  without  limit.  Another 
important  feature  in  modern  cover  papers  is  the  variety  of  finishes, 
antique,  laid,  linen,  hand-made,  crash  and  others  in  great  variety, 
contributing  to  the  style  and  quality  which  are  desired  in  work 
intended  primarily  to  attract  favorable  attention. 

Stock  sizes  in  Cover  Papers  are  20x25  and  22x28.  Other  sizes 
can  be  had  to  order  only.  Weights  can  be  obtained  in  these  sizes 
from  25  pounds  per  ream  to  125  pounds.  Prices  vary  from  5c  to  25c 
per  pound. 

Cover  Papers,  as  the  name  implies,  are  mainly  used  for  covers  of 
pamphlets,  booklets,  folders,  catalogues,  etc.  In  the  selection  of  a  cover, 
the  text,  the  illustrations,  color  combination,  etc.,  must  be  carefully 
considered  to  obtain  the  desired  efl^ect.  Cover  Papers,  however,  can 
also  be  used  for  many  other  kinds  of  printing  matter,  such  as  pro- 
grams, folders,  leaflets,  letter  inserts,  circulars,  announcements,  etc. 

[366] 


ADVERTISING. 


ILLUSTRATIONS. 


The  illustrating  of  advertising  matter  is  done  by  various  pro- 
cesses. Mostly  half-tone  engravings,  line  engravings,  zinc  etchings 
or  wood  engravings  are  used. 

HALF-TONE   ENGRAVING. 

Half-tone  Engraving  is  the  only  process  known  today  by  which 
Paintings,  Wash  Drawings,  Photographs  or  natural  objects  may  be 
engraved  by  chemical  methods  for  use  upon  the  printing  press. 

A  Negative  is  made  by  interposing  a  screen  between  the  object 
to  be  reproduced  and  the  sensitized  plate  in  the  camera.  This 
"screen"  consists  of  a  glass  plate  which  is  finely  ruled  with  horizontal 
and  vertical  lines.  It  divides  the  image  on  the  photographic  negative 
into  dots  and  lines.  A  print  from  the  negative  is  made  upon  a 
sensitized  copper  plate,  which  is  then  etched  in  an  acid  bath.  The 
size  of  the  dots  determines  the  printin-g  surface  of  the  plate. 

A  half-tone  plate  made  with  a  screen  of  60  lines  to  the  square 
inch  can  be  stereotyped  and  be  printed  on  the  perfection  presses  of 
the  metropolitan  dailies. 

A  half-tone  plate  made  with  screens  of  80  or  100  lines  will  print 
on  a  platen  press  on  news  or  book  paper.     It  can  be  electrotyped. 

A  half-tone  plate  made  with  a  screen  of  1*20  or  130  lines  can  be 
printed  on  super-calendared  book  paper  or  plate  paper,  but  not  on 
news  paper.     It  can  be  electrotyped  or  better  nickeltyped. 

Half-tone  plates  of  150  or  175  line  screens,  should  be  printed 
only  on  the  best  of  enameled  or  plated  paper.    Use  always  originals. 

The  cost  of  half-tone  engraving  plain  square,  20  cents  per  square 
inch ;  blocked-out  or  vignetted,  25  cents  per  square  inch.  Minimum 
cost  of  small-sized  engravings  $2.00. 

The  copy  for  half-tone  engravings  ought  to  be  very  clean,  sharp 
and  distinct,  free  from  all  defects,  as  the  half-tone  is  an  absolutely 
faithful  reproduction  of  the  same.  In  cases  of  photographs  of  indus- 
trial objects,  where  much  detail  must  be  shown,  a  retouching  of  the 
photograph  is  necessary.  This  requires  very  difficult  art  work,  and 
is  charged  extra. 

LINE    engraving. 

Line  Engr.wing  (Zinc  Etching)  can  be  made  from  any  Pen  and 
Ink  Drawing,  Printed  matter,  or  anything  consisting  of  distinct  lines 
and  dots,  by  photographing  the  same  without  screen  and  printing 
from  the  negative  on  a  sensitized  zinc  plate.    This  is  then  etched  in 

[367] 


CHAPTER  XXVI. 

an  acid  bath,  and  produces  a  perfect  printing  plate,  which  can  be  used 
as  original,  or  be  duplicated  by  stereotyping  or  electrotyping. 

Cost  of  Zinc  Etching  is  7  cents  per  square  inch.  Minimum  price 
of  small  cuts  75  cents. 

WOOD   ENGRAVING, 

Wood  Engraving  has  been  to  a  great  extent  supplanted  by  the 
chemical  processes  of  engraving.  Still,  where  special  sharpness  of 
outline,  or  intricate  detail  work,  is  desired,  it  often  becomes  neces- 
sary to  have  the  subject  engraved  on  wood.  Then,  again,  it  is  decid- 
edly the  best  process  for  mechanical  subjects  and  illustrations  which 
are  to  be  extensively  duplicated. 

electrotyping. 

Electrotyping  is  not  engraving,  but  a  process  for  duplicating 
engravings,  cuts,  type  forms,  etc.  A  mold  of  the  object  to  be  dupli- 
cated is  taken  in  wax,  and,  together  with  a  piece  of  copper,  the  mold 
is  hung  into  an  acidulated  solution  of  copper  sulphate.  An  electric 
current  is  led  into  the  vat  and  with  its  aid  a  deposit  of  copper  forms 
on  the  mold.  When  this  shell  of  copper  is  of  sufficient  thickness,  it 
is  removed  from  the  mold  and  backed  up  with  type  metal.  The 
plate  thus  obtained  is  then  mounted  on  wood  or  metal  and  finished 
for  use  on  the  printing  press. 

The  quality  of  the  electrotype  depends  on  the  skillfulness  of  the 
molder,  the  length  of  time  given  for  the  deposit  of  the  copper  and 
on  the  work  by  the  finisher.  The  life  of  the  electrotype  depends  on 
the  quality.  Good  electrotypes  will  stand  250,000  impressions  or 
more.  Poor  electrotypes  will  wear  out  with  10,000  impressions,  if  the 
patience  of  the  printer  lasts  that  long. 

Cost  of  good  electrotypes,  4  cents  per  square  inch.  Minimum 
price  for, small  cuts,  25  cents. 

nickeltyping. 
NiCKELTYPiNG  involvcs  practically  the  same  process  as  electro- 
typing, only  Nickel  metal  is  used  instead  of  copper.  The  finer  fibre 
of  Nickel  results  in  a  sharper  duplicate  and  an  improved  printing 
surface.  Nickeltyping  is  to  be  preferred  in  the  duplicating  of  half- 
tones.   Cost,  5  cents  per  square  inch. 

STEREOTYPING. 

Stereotypes  are  almost  exclusively  used  by  newspapers  for  dupli- 
cating their  forms.  A  mold  or  matrix  is  made  by  beating  wet  paper- 
mache  into  the  form  and  drying  and  hardening  this  matrix  by  heat- 

[368] 


ADVERTISING. 

ing  the  form  to  a  high  temperature.  The  matrix  is  placed  in  a  casting 
box  and  melted  type  metal  poured  thereon.  Wood  base  cuts  should 
not  be  used  in  any  form  which  is  to  be  stereotyped.  Cost  of  stereo- 
types about  2  cents  per  square  inch. 

BILL  POSTING. 

There  are  today  in  the  United  States  bill-boards  in  every  hamlet. 
Every  large  city  and  the  best  towns  of  3,000  inhabitants  or  over  have 
their  own  official  bill  poster. 

Rates  for  posting  are  made  per  one  sheet  poster  for  four  weeks, 
and  vary  according  to  the  population  of  the  different  cities.  Average 
prices  are : 

Cities    under      5,000  population 7  cents  per  sheet 

"         over      5,000  population 9  cents  per  sheet 

"         over  100,000  population 12  cents  per  sheet 

"         over  250,000  population 14  cents  per  sheet 

"         over  500,000  population 16  cents  per  sheet 

Special  prices  are  charged  for  selected  stands.  Discounts  arc 
given  for  three  months'  and  six  months'  showings. 

A  bill  poster's  month  is  four  weeks  instead  of  a  calendar  month. 
A  bill  poster's  year  is  forty-eight  weeks. 

Example  for  approximately  computing  cost  of  Bill  posting.  The 
proposition  to  cover  a  town  of  over  5,000  population,  where  the  rate 
per  one  sheet  and  one  month  is  9  cents.  There  are  20  Stands,  and 
an  8-Sheet  Poster  is  to  be  shown  on  all  stands  for  three  months. 
Solution  : 

8  (sheets)  X  20  (stands)  X3  months) 
X    9  (cents)  =$43.20. 

It  is  necessary  to  add  to  the  number  to  be  posted  25  per  cent  for 
renewals.  Bill  posters  agree  to  keep  the  showings  in  good  condition 
and  renewal's  are  not  charged  for. 

Bill-boards  are  nowadays,  with  few  exceptions,  faced  with  sheet 
iron  and  are  generally  very  substantial. 

COST  OF  PRINTING  POSTERS. 

Cost  of  Printing  Posters.  The  best  high-grade  pictorial  work 
is  done  by  Lithography.  The  cost  of  making  8-Sheet  Posters  (size 
most  generally  used)  of  that  kind  is  approximately  as  follows: 


[369] 


CHAPTER  XXVI. 


In  lots  of 

8  colors. 

4  colors. 

5  colors. 

1.000 

$420.00 

(42c  per  poster) 

$560.00 

(56c  per  poster) 

$700.00 
(70c  per  poster) 

2,000 

$600.00 
(30c  per  poster) 

$760.00 
(38c  per  poster) 

$900.00 
(45c  per  poster) 

3,000 

$750.00 

(25c  per  poster) 

$930.00 

(31c  per  poster) 

$1,100.00 

(37c  per  poster) 

4,000 

$840.00 
(21c  per  poster) 

$1,080.00 
(27c  per  poster) 

$1,300.00 
(32.5c  per  poster) 

5,000 

$900.00 
(18c  per  poster) 

$1,200.00 
(24c  per  poster) 

$1,500.00 
(80c  per  poster) 

These  prices  are  for  high-grade  pictorial  work  (lithography)  and 
include  designs,  etc.  It  ought  to  be  mentioned,  however,  that  the 
"design"  influences  the  cost  materially. 

One-color  and  two-color  posters  (not  pictorial)  are  generally 
done  by  letter  press  and  the  cost  is  much  lower. 

Signs  on  Dead  Walls  are  generally  sold  on  yearly  contracts. 
The  price  varies  with  locations  and  space  covered.  It  averages  about 
6  cents  per  square  foot  per  year,  one  painting  included. 

Bulletin  Sign  Boards  are  usually  10  feet  high,  although  some 
are  12  and  14  feet.  The  price  varies  according  to  locations  from 
25  to  50  cents  per  running  foot  per  month.  Contracts  must  run  at 
least  six  months  and  each  six  months  of  the  contract  include  one 
painting. 


[370] 


ADVERTISING. 


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¥2,  rrf 


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I 
I 


I 
I 

I 


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I 

J 


DIMENSIONS  OF  POSTERS. 

The  size  of  a  one-sheet  poster  is  28  x  42  inches.  The  standard  height  from 
8-sheet  size  up  is  9J4  feet.  The  width  of  an  8-sheet  is  7  feet.  Add  3J^  feet  to 
the  width  for  each  additional  4  sheets  added  to  the  poster. 


[371 : 


CHAPTER  XXVI. 


STREET   CAR  ADVERTISING 

Has  been  given  an  impetus  during  the  last  years,  and  the  system 
been  much  improved.  It  is  possible  to  advertise  in  any  or  in  all 
towns  where  street  cars  are  running. 

In  Street  Car  Advertising  parlance  a  "full  run"  means  one  card 
in  every  street  car  in  a  given  city  or  town,  or  group  of  towns,  even  if 
several  lines  or  routes  are  implied.  Often  suburban  and  interurban 
routes  are  included.  In  other  words,  it  is  necessary  to  advertise 
"full  run"  to  completely  cover  a  given  territory  by  street  cars.  Con- 
tracts can  also  be  made  for  "half  run"  (one  card  in  every  other  car) 
and  in  some  cases  for  any  other  fraction  of  a  "full  run." 

The  rates  are  50  cents  per  card  per  month  for  three  months; 
45  cents  for  si?:  months;  40  cents  for  a  year  for  a  full  run.  When 
less  than  a  full  run  is  used,  5  cents  additional  per  card  per  month 
is  charged. 

Example.    The  proposition  is  to  cover  XYZ  City  completely  for 
one   year.     The  city  has   two   street  car  lines,   altogether   40   cars, 
constituting  a  "full  run"  for  that  territory.    The  cost  is : 
40  (cars)  X  40  (cents  X  12  (months)  $192.00'. 

The  Street  Car  Advertising  Agent  figures  360  days  to  the  year, 
and  expresses  the  above,  in  order  to  avoid  the  large  sum,  as : 
lys  cents  per  car  per  day. 

These  rates,  of  course,  do  not  include  the  cards  which  must  be 
furnished. 

The  Standard  size  for  Street  Car  Cards  is  11  inches  high  by  21 
inches  wide. 

Cost  of  printing  Street  Car  Cards  is  approximately  as  follows: 

Quantity     1  color     2  colors     3  colors     4  colors     5  colors 


10 

$  2.00 

$  3,25 

$  4.75 

$  6.25 

$    8.00 

50 

2.70 

3.95 

5.46 

6.95 

8.70 

100 

3.40 

4.65 

6.15 

7.65 

9.40 

200 

5.00 

6.50 

8.00 

9.50 

11.25 

500 

9.25 

10.75 

12.50 

14.25 

16.25 

1,000 

15.50 

17.50 

20.00 

22.50 

25.50 

2,000 

28.00 

32.00 

36.00 

40.00 

44.50 

5,000 

65.00 

75.00 

85.00 

97.50 

110.00 

[372] 


APPENDIX, 


Laws  of  Ohio  Relating  to  Building  and  Loan  Associations. 


(Senate  Bill  No.  419.) 

AN  ACT 

To  provide  for  the  organization,  regulation  and  inspection  of  Building 
and  Loan  Associations,  and  Savings  Associations. 

Be  it  enacted  by  the  General  Assembly  of  the  State  of  Ohio: 

AUTHORIZED  AND  DEFINED.* 
Section  1.  A  corporation  for  the  purpose  of  raising  money  to  be 
loaned  to  its  members,  and  others,  shall  be  known  in  this  act  as  a 
"Building  and  Loan  Association,"  or  as  a  "Savings  Association." 
Associations  organized  under  the  laws  of  this  state  shall  be  known 
in  this  act  as  "Domestic"  associations,  and  those  organized  under 
the  laws  of  other  states  or  territories,  as  "Foreign"  associations. 
Associations  may  be  organized  and  conducted  under  the  general  laws 
of  Ohio  relating  to  corporations,  except  as  otherwise  provided  in 
this  act. 

A  manufacturing  corporation  may  become  a  member  of  a  building  association 
to  borrow  money:  Norwalk  Savings  Bk.  Co.  v.  The  Metal  Spinning  and  Stamping 
Co.,  14  C.  C.  13;  7  O.  D.  275. 

A  receiver  cannot  be  appointed  upon  the  sole  application  of  the  directors, 
asserting  no  individual  rights  in  the  property  of  the  building  association:  Schone 
et  al.  V.  The  Consolidated  Bldg.  and  Savings  Co.,  4  N.  P.  216;  6  O.  D.  246. 

NAME. 
Sec.  2.  The  name  of  every  such  corporation  hereafter  organ- 
ized, or  heretofore  organized  and  hereafter  changing  its  name,  shall 
begin  with  any  word  it  may  select,  and  shall  end  with  the  word 
"Company"  or  with  the  word  "Association,"  and  it  shall  also  use  in 
its  name  in  any  order  it  may  designate,  and  if  it  so  desires,  with  other 


*  By  .Judge  O.  P.  Sperra,  Ex-Deputy  Inspector  of  Building  Associations  of  the 
State   of   nViio, 

[373] 


APPENDIX. 

words  not  forbidden  by  law,  any  one  or  more  of  the  following  words, 
or  combinations  of  words,  at  its  option,  to  wit:  "Savings,"  "Build- 
ing," "Loan,"  "Savings  and  Loan,"  or  "Building  and  Loan."  Pro- 
vided, however,  such  association  shall  not  use  the  words  "bank," 
"banking"  or  "trust",  or  any  one  or  more  of  them  in  combination. 

In  organizing  a  building  association  under  the  act  of  February  21,  1867  (64 
V.  18),  the  certificate  of  incorporation  was  by  mistake  acknowledged  before  a 
notary  public,  instead  of  being  acknowledged  before  a  jus'tice  of  the  peace,  as 
then  required.  In  proceedings  instituted  under  the  act  of  March  10,  1859  (S.  & 
C.  1172),  the  mistake  was  subsequently  corrected:  Held,  that  the  effect  of  the 
correction  was  to  make  the  association  a  corporation  de  jure  from  the  date  of  its 
organization,  not  only  as  against  persons  dealing  directly  with  the  association,  but 
as  against  all  others:    Spinning  v.  Building  Ass'n,  26  O.  S,  483. 

ORGANIZATION. 

Sec.  3.  The  capital  stock  named  in  the  articles  of  incorpora- 
tion shall  be  deemed  to  refer  to  the  authorized  capital,  and  the  organ- 
ization may  be  completed  and  business  commenced  when  5  per  cent 
thereof  is  subscribed,  and  when  the  names  and  addresses  of  its 
officers  and  not  less  than  two  copies  of  its  constitution  and  by-laws 
have  been  filed  with  the  Inspector  of  Building  and  Loan  Associations. 

Sec.  4.  Directors  may  be  elected  for  any  term,  not  less  than 
one  year  nor  longer  than  three  years,  but  if  such  term  be  longer 
than  one  year,  it  shall  be  so  arranged  that  the  term  of  office  of  an 
equal  number  of  directors,  as  nearly  as  may  be,  will  expire  each  year. 

POWERS. 

Sec.  5.  Such  corporation  shall  have  all  the  powers  set  forth 
in  the  following  sections  of  this  act. 

Sec.  6.  To  receive  money  on  deposit,  and  all  persons,  firms, 
corporations  and  courts,  their  agents,  officers  and  appointees  are 
hereby  authorized  to  make  such  deposits  and  stock  deposits,  but  such 
corporation  shall  not  pay  interest  thereon  exceeding  the  legal  rate; 
and  whenever  any  such  deposits  or  stock  deposits  are  made  to  the 
joint  account  of  two  or  more  persons,  whether  adults  or  minors, 
with  a  joint  order  to  the  corporation  that  such  deposits  or  any  part 
thereof  are  to  be  payable  on  the  order  of  any  one  or  more  of  said 
joint  depositors,  and  that  such  deposits  shall  continue  to  be  so  pay- 
able notwithstanding  the  death  or  incapacity  of  one  or  more  of  the 
persons  making  such  joint  deposits,  such  account  shall  be  payable  to 
any  one  or  more  of  such  survivors  or  survivor  or  order  notwith- 
standing such  death  or  incapacity.  And  no  recovery  shall  be  had 
against  said  corporation  for  amounts  so  paid  and  charged  to  sucK 
account. 

[374] 


APPENDIX. 

Sec.  7.  To  issue  stock  to  members  on  such  terms  and  conditions 
as  the  constitution  and  by-laws  may  provide.  Each  member  shall 
have  the  right  to  vote  his  stock  in  whole  or  fractional  shares,  as  the 
constitution  and  by-laws  may  provide,  but  no  person  shall  vote  more 
than  twenty  shares  in  any  such  corporation  in  his  own  right,  and  no 
one  shall  have  the  right  to  cumulate  his  votes,  provided,  however, 
every  subscriber  for  stock  shall  have  the  right  in  accordance  with 
the  constitution  of  the  association,  to  vote  the  amount  of  stock  so 
subscribed  for,  in  no  event  to  exceed  twenty  shares. 

Each  association  should  provide  itself  with  a  corporate  seal  as  directed  by  the 
general  statutes  of  the  state  and  all  issues  of  stock  by  the  association,  in  addition 
to  having  the  signatures  of  the  president  and  secretary,  should  also  bear  the  im- 
press of  such  seal.     (Ruling  of  the  Department.) 

Sec.  8.  To  assess  and  collect  from  members  and  others,  such 
dues,  fines,  interest  and  premium  on  loans  made,  or  other  assess- 
ments, as  may  be  provided  for  in  the  constitution  and  by-laws.  Such 
dues,  fines,  premium  or  other  assessments  shall  not  be  deemed  usury, 
although  in  excess  of  the  legal  rate  of  interest. 

These  various  charges  in  excess  of  usual  conventional  interest  are  not  usurious 
Lucas  V.  C.reen\ille  B.  A..  22  O.  S.  339. 

A  member  who  paid  by  giving  the  secretary  checks  payable  to  the  society 
which  the  secretary  appropriated,  the  constitution  requiring  payments  in  le^al 
money  cannot  hold  the  society,  and  estoppel  arises  from  the  directors  having 
frequently  taken  his  checks,  for  their  power  is  limited  by  the  constitution: 
Mueller  v.  Cohen,  27  Bull,  352. 

Payments  should  be  made  at  the  usual  place  of  business  of  the  association,  and 
during  the  time  fixed  by  the  by-lavvs,  and  while  the  board  of  directors  are  in 
session  and  should  be  in  cash  and  paid  to  the  board,  and  also  are  good  if  so  made 
to  any  officer  or  director  in  the  presence  of  the  directors:  Sachs  v.  The  Duck- 
worth Bldg.  and  Loan  Ass'n.,  4.  N.  P.  214;  6  O.  D.  254. 

If  payments  are  made  otherwise  they  are  good,  if  the  party  paying  shows  that 
the  money  actually  reached  the  association.     Id. 

The  burden  is  on  the  party  paying  to  show  payments  as  above  stated;  the 
introduction  of  a  pass  book  showing  credits  is  not  sufficient.     Id. 

FINES  —  Reasonable  fines  may  be  imposed,  but  only  one  fine  for  the  same 
due  and  none  for  default  on  interest:  Hagerman  v.  Ohio  B.  A.,  25  O.  S  186; 
Forest  City  B.  A.  v.  Gallagher,  25  O.  S.  208. 

The  mortgage  may  secure  fines  though  the  statute  is  silent,  for  power  to  fine 
implies  power  to  take  security  for  it:    Hagerman  v.  Ohio  B.  A.,  25  O.  S.  186. 

Fines  cease  on  a  decree  for  sale,  for  interest  then  begins  and  the  society 
cannot  have  both:    Windisch  v.  Korman,  5  Bull.  364. 

Fines  are  not  stopped  by  the  mortgagor's  assignment  for  benefit  of  creditors, 
but  run  until  payment  of  the  mortgage  under  a  decree  to  sell:  Hutchinson  v. 
Straub,  9  Cir.  D.  171;  16  C.   C.   452. 

INTEREST  —  No  interest  is  chargeable  on  the  premium :  Forest  City  B.  A. 
r.  Gallagher,  25  O.  S.  208;  Risk  v.  Bldg.  Ass'n,  31  O.  S.  517,  519. 

The  law  of  1880  (S  3835)  reduced  the  interest  bearing  power  of  loans  by 
annual  rebate,  but  did  not  provide  thereby  for  cancelling  parts  of  a  loan  by 
crediting  dues  year  by  year:    Seibel  v.  Bldg.  Ass'n,  43  O.  S.  371. 

The  borrower's  contract  as  to  rebate  of  interest  and  payment  of  dividend  is  a 
vested  right  and  cannot  be  altered  as  a  condition  of  granting  a  loan:  Betz  v. 
Fulton  B.  A.,  1  N.  P.  42;  1  O.  D.  58. 

PREMIUMS  —  The  premium  can  be  fixed  only  by  competitive  bidding.  A 
minimum  premium  is  not  to  be  fixed  as  a  condition  of  granting  a  loan:  State  v. 
Greenville  B.  A.,  29  O.  S.  92;  State  v.  Bldg.  Ass'n,  35  O.  S.  258. 

[375] 


APPENDIX. 

A  premium  not  fixed  by  competitive  sale  is  usurious  if  it  raises  the  interest 
above  the  legal  rate:    Bates  v.  People's  Ass'n,  42  O.  S.  655. 

A  stipulation  in  the  mortgage  that  the  whole  loan  should  become  due  on 
default  of  payment  was  held  void  where  the  premium  was  all  deducted  in 
advance,  for  it  amounted  to  forfeiting  the  premium:    Hagerman  v.   Ohio  B.  A., 

25  O.  S.  186,  205. 

The  premium  on  existing  loans  cannot  be  increased  by  any  change  of  by-laws, 
unless  power  to  do  so  is  explicitly  reserved:  Burke  v.  Home  Bldg.  Ass'n,  7  BulU 
114;  Home  Bldg.  Ass'n  v.  Boning,  7  Bull.  174. 

The  right  to  fix  the  premium  is  conferred  upon  the  association  alone  since 
(§  8836-3)  is  in  force:    People's  S.  &  L.  Ass'n  v.  Roberts,  5  N.  P.  86. 

The  premium  may  be  in  excess  of  the  legal  rate  of  interest:    Id. 

1.  USURY  LAWS  SUBJECT  OF  LEGISLATIVE  CONTROL. 

Usury  laws  are  statutory,  and  their  application  may  be  extended  or  limited  at 
the  pleasure  of  the  legislature. 

2.  SECTION  3836-3  REVISED  STATUTES  EXEMPTING  BUILDING 
AND  LOAN  ASSOCIATIONS  FROM  USURY  LAWS  IS  CONSTITUTIONAL. 

Section  3836-3  Rev.  Stat,  exempting  building  and  loan  associations  from  the 
operation  of  the  usury  laws  of  the  state,  with  respect  to  loans  made  to  members 
and  depositors,  is  neither  violative  of  Sec.  26,  Art.  2,  of  the  constitution  which 
requires  all  laws  of  a  general  nature  to  have  uniform  operation  throughout  the 
state,  nor  Sec.  1,  Art.  13,  which  provides  that  the  general  assembly  shall  pass 
no  special  act  conferring  corporate  powers,  nor  of  Sees.  1  and  2,  Art.  1,  of 
the  constitution. 

Brooklyn  B.  &  L.  A.  Co.  v.  Desnoyers  et  al.  Vol.  XLIX  Ohio  Law  Bull.  a52, 

26  O.  C.  C.  352. 

1.  Section  3836-3  Rev.  Stat.,  which  confers  power  on  building  and  loan 
associations  "to  assess  and  collect  from  members  and  depositors,  such  dues,  fines, 
interest  and  premium  on  loans  made,  or  other  assessments  as  may  be  provided 
for  in  the  constitution  and  by-laws," — and  which  further  provides,  that  "such 
dues,  fines,  premiums  or  other  assessments,  shall  not  be  deemed  usury,  although 
in  excess  of  the  legal  rate  of  interest," — is  a  valid  enactment,  and  is  not  in  con- 
flict with  Sec.  26,  Art.  2,  nor  with  Sec.  2,  Art.  1,  of  the  constitution  of  Ohio. 

2.  Under  the  provisions  of  said  statute,  the  premium  for  a  loan,  if  reason- 
able in  amount,  need  not  be  ascertained  by  competitive  bidding  for  precedence  in 
obtaining  the  loan,  but  it  may  be  fixed  at  a  uniform  rate  by  the  constitution  and 
by-laws  of  the  association.  Simon  W.  Cramer  v.  Southern  Ohio  Loan  &  Trust 
Co.     Error  to  the  circuit  court  of  Paulding  county.     50  Ohio  Law  Bull.  163. 

BUILDING    AND    LOAN    ASSOCIATIONS— USURY— CONSTITUTIONAL 

LAW. 
(Richland  Common  Pleas,  January  8,  1905.) 
1.     PETITION  MAY  BE  CONSTRUED  AS  MAKING  DIRECT  ALLEGA- 
TION, WHEN. 

Although  there  is  no  direct  allegation  in  the  petition  that  defendant  is  a 
building  and  loan  corporation,  it  will  be  construed  as  making  such  allegation  when 
it  charges  defendant  with  doing  that  which  such  a  corporation  alone  may  do. 

'  2.     PRESUMPTION  IN  FAVOR  OF  LEGISLATIVE  ENACTMENTS  NOT 
OVERCOME  EXCEPT  WHERE  INVALIDITY  CLEARLY  APPEARS. 

The  presumption  is  that  legislative  enactments  are  not  in  conflict  with  the 
organic  law;  and  such  enactments  will  not  be  declared  invalid  except  where  the 
conflict  clearly  appears. 

8.  STATUTE  EXEMPTING  BUILDING  AND  LOAN  ASSOCIATIONS 
FROM  USURY  LAWS   (LAN.  R.  L.  6279)   VALID. 

Laning  R.  L.  6279  (B.  3836-3)  exempting  building  and  loan  associations  from 
the  operation  of  the  usury  laws  of  the  state,  is  not  in  conflict  with  the  organic 
law,  nor  violative  of  Sees.  1  and  2,  Art.  1,  of  the  Ohio  bill  of  rights. 

4.  LOWER  COURTS  NOT  BOUND  BY  DECISIONS  OF  SAME 
COURT,  ETC. 

There  is  no  rule  of  law  which  makes  the  decisions  of  a  circuit  court  more 
authoritative  than  the  decisions  of  the  district  court,  or  the  decisions  of  one 
circuit  court  more  authoritative  than  those  of  another;  and  in  case  of  conflict, 
the  one  will  be  followed  which  is  supported  by  the  best  reason.  Lucretta  Car- 
michael  v.  Indemnity  Sav.  &  Loan  Co.,  15  O.  D.  341. 

[376] 


APPENDIX. 

Sec.  9.  To  permit  members  to  withdraw  all  or  part  of  their  stock 
deposits,  at  such  times,  and  upon  such  terms,  as  the  constitution  and 
by-laws  may  provide.  Any  member,  however,  who  withdraws  his 
entire  stock  deposit,  or  whose  stock  has  matured,  shall  be  entitled 
to  receive  all  dues  paid  in  and  dividends  declared  thereon,  less  all 
fines  or  other  assessments,  and  less  the  pro  rata  share  of  all  losses, 
if  any  have  occurred.  To  permit  withdrawal  of  deposits  upon  such 
terms  and  conditions  as  the  association  may  provide  except  by  check 
or  draft ;  provided,  however,  that  no  such  association  shall  be  per- 
mitted to  carry  for  any  member  or  depositor  any  demand,  commercial 
or  checking  account,  but  nothing  in  this  act  shall  be  construed  to 
prevent  members  or  depositors  from  withdrawing  funds  by  non- 
negotiable  orders. 

Notice  of  withdrawal  will  not  save  a  member  from  liability  for  losses  incurred 
before  he  succeeds  in  getting  his  money:  Harrison  Bldg.  Ass'n  v.  Howell,  39 
B.  386,  edit. 

Notice  of  withdrawal  does  not  terminate  liability  for  losses  by  depreciation  of 
securities  sustained  at  the  time  of  notice:  Vincent  v.  Harrison  B  &  L.  Co.,  7  O. 
D.  353;  5  N.  P.  273;  /rf.  390. 

The  constitution  providing  that  withdrawal  claims  could  only  be  paid  in  the 
order  of  notice  given,  a  borrowing  member,  having  purchased  a  withdrawal  claim 
not  yet  payable,  cannot  have  his  mortgage  canceled  upon  his  tendering  as  pay- 
ment the  withdrawal  claim:    Ward  v.  Bldg.  Co.,  5  N.  P.  133;  8  Low.  D.  489. 

A  withdrawing  member  is,  until  paid,  a  stockholder  and  not  a  creditor:  8  Low. 
D.  594;  6  N.  P.  185;  Rehn  v.  North  Fairmount  B.  &  S.  Co.,  7  Low.  D.  398; 
6  N.  P.  814. 

Notice  of  withdrawal  before  the  appointment  of  a  receiver  and  when  there 
was  sufficient  money  on  hand  to  pay  him,  will  not  exonerate  him  from  sharing 
losses  already  incurred,  though  this  was  not  then  known.  Vincent  v.  Harrison 
B.  &  L.  Co.,  7  Low.  D.  353;  5  N.  P.  273;  S.  C.  as  Harrison  Bldg.  Ass'n  v. 
Howell.  39  B.  386. 

The  rieht  to  compromise  with  the  association  is  not  a  right  to  obtain  what 
would  be  grossly  inequitable  and  a  fraud  on  other  shareholders:  Main  St.  B,  and 
L.  Co.  V.  Eichter,  9  Cir.  D.  74 ;  16  C.  C.  191. 

Withdrawal  and  cancellation  of  the  mortgage  of  a  borrowing  member,  on  his 
paying  an  assessment  for  losses,  where  the  society  is  then  hopelessly  insolvent 
and  the  assessment  grossly  inadequate,  will  not  relieve  him  from  liability  to  con- 
tribute further:  Galvin  v.  Albers,  9  Low.  D.  279;  6  N.  P.  273. 

Sec.  10.  To  cancel  shares  and  parts  of  shares  of  stock  upon 
which  the  credits  have  been  withdrawn,  or  upon  which  loans  have 
been  repaid,  and  re-issue  them  as  new  stock. 

Sec.  11.  To  issue  stock  to  minors  and  receive  deposits  thereon 
and  permit  both  stock  and  deposits  to  be  withdrawn,  transferred, 
pledged  and  voted  by  such  minors  as  other  stock  and  stock  deposits; 
to  receive  deposits  of  money  by  or  for  minors  and  to  pay  the  same 
to  such  minors,  or  upon  their  order,  and  the  receipt  or  paid  order  of 
such  minor,  therefor,  shall  be  a  valid  acquittance  of  the  rights  of 
all  concerned. 

Sec.  12.     To  lease,  acquire,  hold,  encumber,  convey  and  rent  such 

[377] 


APPENDIX. 

real  estate  and  personal  property  as  is  necessary  for  the  transaction 
of  its  business,  or  necessary  to  enforce  or  protect  its  securities. 

Purchases  of  land  to  be  allotted  among  members  is  ultra  vires  and  the  pur- 
chase notes  are  voidable:  Vos  v.  Cedar  Grove  B.  A.,  &  Bull.  194. 

A  corporation  is  an  artificial  being,  which  exists  only  in  legal  contemplation, 
and,  being  a  mere  creature  of  the  law,  possesses  only  those  attributes  which  the 
law  confers,  or  such  as  may  be  implied  as  necessary  to  its  existence,  and  it  can 
exercise  no  powers  but  such  as  are  given  to  it  by  its  charter,  or  such  as  are 
necessary  to  carry  into  effect  the  powers  expressly  conferred:  Bonham  v.  Taylor, 
100-108;  and  corporations  are  strictly  limited  to  the  exercise  of  such  powers, 
and  in  such  manner  and  by  such  agents,  as  are  provided  in  their  charters; 
Bartholomew  v.  Bentley,  1  O.  S.  87. 

Where  property  which  a  corporation,  under  certain  circumstances,  is  author- 
ized by  its  charter  to  acquire,  is  purchased  in  a  mode  or  for  a  purpose  not 
authorized,  the  title  of  the  corporation  to  the  property  cannot  be  defeated  by  a 
party  who  is  a  stranger  to  the  agreement  by  which  the  property  was  acquired, 
and  who  is  not  injured  by  the  transfer:  Ehrman  v.  Insurance  Co.,  35  O.  S.  324, 
Okey,   J.,  dissented. 

A  corporation  can  make  no  contracts,  and  do  no  acts,  either  within  or  with- 
out the  state  which  creates  it,  except  such  as  are  authorized  by  its  charter: 
Ewing  V.  Bank,  48  O.  S.  31. 

Sec.  13.  To  borrow  money,  not  exceeding  twenty  per  cent  of 
the  assets,  and  issue  its  evidences  of  indebtedness  or  other  security 
therefor. 

Sec.  14.  To  make  loans  to  members  and  others  on  such  terms, 
conditions  and  securities  as  may  be  provided  by  the  association. 

A  building  and  loan  association  cannot  loan  its  funds  without  other  or  further 
security  than  the  promissory  note  of  the  borrower,  no  matter  how  many  signers 
or  endorsers  there  may  be  to  the  note.  Ruling  of  the  Department  supplemented 
by  opinion  of  the  Attorney-General. 

Collecting  money  from  members  or  depositors  and  loaning  it  among  members 
is  not  exercising  banking  powers:  Forest  City,  etc.,  B.  A.  v.  Gallagher,  23  O.  S. 
208;   Dearborn  v.   Bank,   42  O.  S.  617. 

The  use  a  member  intends  to  make  of  his  loan  need  not  be  ascertained  by  the 
society:    Hagerman  v.  Ohio  B.  A.,  25  O.  S,  186. 

Loans  to  non-members  or  buying  their  notes  is  ultra  rives  nor  are  loans  to 
members  at  usurious  rates  authorized:    State  v.  Greenville  B.  A.,  29  O.  S.  92. 

A  colorable  deposit  to  qualify  one  to  borrow  estops  him  when  sued  for  the 
loan  to  deny  that  he  was  a  depositor:  Bates  v.  People's  Ass'n,  42  O.  S.  655; 
and  so  thought  that  he  drew  out  his  deposit  next  day:  Lockwood  v.  Robbins 
(1  Cleveland  Reporter  101). 

If  the  mortgagor  is  not  in  default  on  foreclosure,  a  stipulated  attorney's  fee, 
payable  on  foreclosure,  is  not  chargeable:    Resting  v.  Donahue,  2  Oh.  Dec.  567. 

The  effect  of  a  provision  in  the  by-laws  of  a  building  and  loan  association 
requiriMg  members  making  loans,  to  be  secured  by  mortgages,  to  insure  the 
property  for  a  sum  to  be  named,  and  to  keep  it  insured  in  a  company  approved 
by  the  association  during  the  continuance  of  the  loan  and  to  deposit  the  policy 
with  the  treasurer  of  the  company,  and  authorizing  the  association,  upon  failure 
of  a  member  so  to  do,  to  make  renewals  at  the  expense  of  the  borrower,  is 
mutual  benefit  or  insurance.  Such  a  provision  makes  the  association  the  agent 
of  the  borrower  and  imposes  upon  it  the  duty  of  renewing  the  policy  if  the 
borrower  fails  to  do  so;  and  if  the  association  neglects  to  keep  the  property  in- 
sured, and  it  is  destroyed  by  fire,  it  is  liable  for  the  loss:  Geswine  v.  Star  B.  & 
L.  Co.   (Lawrence  (4th)  Circuit  Court)  13-23  O.  C.  C,  477. 

A  mortgagor  of  improved  premises  who  stipulates  in  her  mortgage,  as  a 
condition  thereof,  to  procure  insurance  for  the  benefit  of  the  mortgagee,  does  not 
thereby  become  the  agent  of  the  mortgagee  in  procuring  the  insurance. 

Where  an  insurance  company  issues  a  policy  of  insurance  upon  mortgagejl 
property  in  which  it  unconditionally  stipulates  to  pay  the  loss  thereunder  to  the 

[378] 


APPENDIX. 


mortgagee  as  her  interest  may  appear,  it  is  no  defense  to  the  claim  of  the 
mortgagee,  who  has  been  made  a  party  to  an  action  commenced  on  the  policy  by 
the  mortgagor  and  has  set  up  her  mortgage  interest  by  cross-petition,  that  the 
policy  was  procured  by  the  fraudulent  representations  and  concealments  of  the 
mortgagor,  when  it  does  not  appear  that  the  mortgagee  was  a  party  to  the  insur- 
ance contract  or  had  any  knowledge  of  the  fraud:  Clara  E.  Agner  v.  Fireman's 
Insurance  Co.  et  al.,  14  O.  Dec.  268. 

A  mortgage  executed  agreeably  to  the  provisions  of  Sec.  4106  Rev.  Stat,  of 
Ohio,  and  attested  and  acknowledged  as  therein  provided,  is  not  invalid  and 
cannot  be  impeached,  in  the  absence  of  fjaud  or  undue  advantage,  merely  because 
the  witnesses  who  attest  the  signature  of  the  mortgagor  and  -the  notary  public 
taking  his  acknowledgment  are  stockholders  of,  but  not  otherwise  interested  in, 
the  corporation  named  in  said  mortgage  as  grantee. 

In  taking  and  certifying  an  acknowledgment,  as  provided  in  said  Sec.  4106 
Rev.  Stat.,  the  act  of  the  notary  public  or  other  officer  taking  and  certifying  the 
same  is  a  ministerial  and  not  a  judicial  act:  Read,  as  Assignee  for  the  Creditors 
of  Lindsay  v.  The  Toledo  Loan  Co.,  68  Ohio  St.  280. 

Under  Sec.  5464,  Rev.  Stat,  the  dower  interest  of  the  judgment  debtor  may  be 
subjected  to  the  payment  of  his  debt,  notwithstanding  such  interest  has  not  been 
assigned:  Gildhaus  et  al.  v.  Fidelity  Building  &  Savings  Co.  et  al.,  Ohio  Law 
Bull..  Vol.  48,  p.  110. 

Where  an  action  is  commenced  by  the  mortgagor  against  the  mortgagee,  upon 
a  defectively  executed  recorded  mortgage,  for  the  purpose  of  having  the  same 
reformed  and  for  sale  of  the  premises:  Held,  that  judgment  liens  obtained  after 
the  commencement  of  the  action  and  before  decree  reforming  the  mortgage,  do 
not  have  a  preference  over  the  mortgage  lien,  and  that  the  claim  of  the  mortgagor 
should  be  first  satisfied  out  of  the  fund  arising  from  the  sale  of  the  property: 
Caldwell  Building  and  Loan  Ass'n  v.  J.  W.  Bigley  et  al.,  25'  O.  C.  C.  431. 

Where  the  property  of  an  insolvent  debtor  by  order  of  court,  is  placed  in  the 
hands  of  a  receiver  to  be  administered  upon  for  the  payment  of  the  insolvent's 
debts,  a  creditor  who  holds  collaterals  taken  to  secure  his  claim,  and  upon  which 
he  has  realized  before  a  dividend  is  declared;  is  entitled  to  a  dividend  on  only  so 
much  of  his  debt  as  remains  after  deducting  the  proceeds  of  the  collaterals;  and 
this  sum  may  be  ascertained  at  the  time  dividend  is  declared,  although  the  claim 
had  formerly  been  proven  and  allowed  for  the  full  amount:  Buckingham  et  al. 
V.  Springfield  Building  and  Loan  Association  et  al.  (decided  October  13,  1903). 
Ohio  Law  Bull,  Vol.  48,  p.  914. 

The  doctrine  caveat  emptor  applies  to  mortgage  foreclosure  sales  of  real 
estate;  and  one  who  has  entered  into  competitive  bidding  for  the  purchase  of 
property  at  such  sale  cannot,  after  his  bid  is  accepted,  avoid  the  sale  or  refuse  to 
complete  his  pnrch.ise  because  of  the  existence  of  liens  and  encumbrances  thereon, 
or  defects  in  the  title.  Such  purchaser  is  bound  to  examine  the  public  records 
to  ascertain  the  condition  of  the  title  before  entering  his  bid,  or,  failing  so  to  do, 
abide  the  consequences  of  such  neglect. 

A  sale  of  real  property  at  foreclosure  sale  is  not  void  because  the  journal 
entry  recites  that  the  attorney  for  plaintiff  also  confessed  judgment  as  attorney 
for  defendant,  as  the  presumption  is,  in  the  absence  of  proof  to  the  contrary, 
that  such  action  was  authorized;  nor  because  the  published  notice  of  sale  desig- 
nates "C.  E.  Millers  et  al.,"  instead  of  "Charles  E.  Miles  et  al.,"  as  defendants, 
and  gives  the  docket  number  of  the  case  as  "16,149,"  instead  of  "43,834."  Such 
errors  are  mere  irregularities,  nei-ther  preventing  the  passing  of  the  title  to  the 
purchaser,  nor  affecting  the  validity  of  the  sale:  Brickell  v.  Miles  et  al. 
(Franklin  Common  Pleas,  February  24,  1904)  14  Dec.  456. 

A  judgment  for  the  amount  due  at  the  date  of  its  rendition,  instead  of  at  the 
date  of  filing  the  petition,  is  not  excessive  because  no  supplementary  petition  was 
filed,  when  the  petition  prays  "that  an  account  be  taken"  and  judgment  be 
rendered  for  the  "amounts  found  due,"  and  no  new  facts  have  arisen  after  the 
filing  of  the  petition,  and  all  the  facts  necessary  to  determine  the  amount 
becoming  due  thereafter  are  averred  therein.  A  supplementary  petition  is  un- 
necessary under  such  circumstances:  Martha  N.  Miller  v.  Highland  Ave.  L.  and 
B.  Co.,  25  C.   C.  733. 

CONTRACTS.  RULE  AS  TO  STATUTES  BEING  A  PART  OF  CON- 
TRACT.  The  rule  that  the  law  writes  into  every  contract  the  provisions  of  the 
statutes  that  are  applicable  to  the  transaction  refers  only  to  statutes  existing  at 
the  time  the  contract  was  made,  and  not  to  subsequent  statutes  such  as  would 
abrogate  or  impair  the  contract.     Supreme  Court  of  Illinois,  Vol.  226  at  page  57. 

The  West  Virginia  Supreme   Court  of  Appeals  held  in  the  case  of  William 


[379] 


APPENDIX. 


B.  Burkheimer,  Jr.  v.  National  Mutual  Building  and  Loan  Association  of  New 
York,  that  a  change  of  the  plan  of  a  building  and  loan  association  making  a 
material  departure  from  its  original  plan  is  sufficient  to  justify  a  dissolution  of 
its  contract  with  a  member.     4  L.  R.  A.  (N.  S.)  1047. 

Sec.  15.  To  cancel  such  loans  and  release  the  securities  on  such 
terms  as  the  board  of  directors  may  provide.  But  any  member  may 
have  his  loan  canceled  upon  the  following  terms,  to  wit :  After  the 
premium  for  one  year  has  been  paid,  and  also  the  interest  and 
premium  up  to  the  date  of  cancellation,  the  borrower  shall  pay  the 
sum  actually  borrowed  less  the  dues  paid  and  dividends  credited.  He 
shall  pay  also  any  fines  or  other  assessments  required  by  the  constitu- 
tion and  by-laws. 

Withdrawal  or  release  on  bona  fide  and  reasonable  compromise  is  legal  both 
for  drawn  and  undrawn  shares:  State  v.  BIdg.  Ass'n,  25  O.  S.  285;  Wangerien 
V.  Aspell,  47  O.  S.  250. 

A  bona  fide  compromise  will  not  be  rescinded  because  the  released  member 
received  more  than  a  pro  rata  share:    Wangerien  v.  Aspell,  47  O.  S.  250. 

The  constitution  providing  that  withdrawal  claims  could  only  be  paid  in  the 
order  of  notice  given,  a  borrowing  member,  having  purchased  a  withdrawal  claim 
not  yet  payable,  cannot  have  his  mortgage  cancelled  upon  his  tendering  as  pay- 
ment the  withdrawal  claim:    Ward  v.  Bldg.  Ass'n  Co.,  5  N.  P.  133. 

All  canceled  shares  of  stock  mus't  be  preserved  with  the  files  and  other  papers 
of  the  association  in  such  manner  as  to  be  readily  accessible.  (Ruling  of  the 
Department.) 

An  answer  to  a  foreclosure  suit  that  the  by-laws  provide  against  foreclosure 
until  the  dues  are  three  months  in  arrears  states  a  defense  to  a  suit  begun  in  two 
and  one-half  months:  Home  Bldg.  Ass'n  Co.  v.  Tenny,  8  Low.  D.  391; 
7  N.  P.  130. 

On  foreclosure,  when  the  mortgagor  is  not  in  default,  a  stipulated  attorney's 
fee,  to  be  paid  on  foreclosure,  is  not  enforcible:  Resting  v.  Donahue,  6  Cir.  D. 
262;  13  C.  C.  653. 

A  mortgage  reciting  that  the  borrower  owned  a  certain  number  of  shares 
and  tViat  the  company  advanced  to  him  $1,480,  the  estimated  value  thereof,  as  a 
loan  and  that  to  secure  payment  thereof  he  mortgaged  the  property,  is  not  within 
the  rule  that  the  property  alone  can  be  looked  to  without  judgment  over  unless 
the  rule  that  the  property  alone  can  be  looked  to  without  judgment  over,  unless 
hence  a  judgment  for  deficiency  after  sale  is  proper:  McHenry  v.  Batavia  Bldg. 
&  L.  Co.,  9  Cir.  D.  531;  17  C.  C.  206. 

A  building  and  loan  association  is  without  authority  to  withdraw  mortgage 
credits  for  the  purpose  of  paying  fixed  charges. 

Sec.  16.  To  accumulate  from  the  earnings  a  "Reserve  Fund"  for 
the  payment  of  contingent  losses,  and  an  "Undivided  Profit  Fund," 
both  of  which  may  be  loaned  and  invested  as  other  funds  of  the  asso- 
ciation;  and  to  invest  any  of  its  idle  funds,  or  any  part  thereof,  in 
bonds  or  interest  bearing  obligations  of  the  United  States,  or  of  the 
District  of  Columbia,  or  of  the  state  of  Ohio,  or  of  any  county, 
township,  school  district,  or  other  political  division  in  the  state  of 
Ohio,  or  of  any  incorporated  city,  village,  or  other  incorporated 
municipality  in  the  state  of  Ohio;  and  in  such  other  securities  as  are 
now  or  may  hereafter  be  accepted  by  the  United  States  to  secure 
government  deposits  in  National  banks ;  provided  that  such  invest- 
ments shall  at  no  time  amount  in  the  aggregate  to  more  than  twenty 

[380] 


APPENDIX. 

per  cent  of  the  assets  of  such  corporation.  Also  to  deposit  any  of 
said  funds  or  any  part  thereof,  in  any  financial  institution  that  is 
subject  to  inspection  by  the  United  States,  or  by  the  state  of  Ohio; 
and  receive  therefor  certificates  of  deposit  and  to  buy  but  not  sell, 
except  in  case  of  financial  emergency  and  then  only  with  the  consent 
previously  had  of  the  Inspector  of  Building  and  Loan  Associations, 
interest  bearing  obligations  secured  by  real  estate  mortgages,  which 
shall  in  all  respects  comply  with,  and  be  within  the  rules  adopted  for 
making  mortgage  loans  by  the  corporation  making  such  investments, 
and  such  mortgage  investments  may  be  held  and  reported  as  mort- 
gage loans. 

Sec.  17.  To  make  such  annual  or  semi-annual  distribution  of 
the  earnings  as  is  hereinafter  provided,  and  as  the  constitution  and 
by-laws  may  prescribe 

The  ownership  of  a  share  of  stock  involves  the  right  to  participate  in  the 
dividends  declared  from  the  profits  of  the  business,  and,  upon  the  dissolution 
of  the  corporation,  to  a  proportionate  share  of  the  fund  remaining  after  payment 
of  the  corporate  debts:    Jones  v.  Davis,  35  O.  S.  476,  477. 

Sec.  18.  To  increase  or  decrease  its  authorized  capital  or  the 
face  value  of  its  shares,  or  change  the  name  of  the  corporation  at 
any  time,  by  a  majority  vote  of  its  board  of  directors;  and  a  cer- 
tificate of  such  action  shall  be  made  by  the  president  and  secretary, 
and  duly  filed  with  the  secretary  of  state,  after  which  in  the  use  of 
the  changed  stock  and  changed  name  all  rights  of  all  parties  shall 
remain  the  same  as  before  any  such  change  was  made. 

Sec.  19.  To  dissolve  the  corporation  when  its  continuance  shall 
be  deemed  by  a  majority  vote  of  the  stock  entitled  to  be  voted  under 
its  constitution  and  by-laws,  which  shall  not  be  inconsistent  with  the 
provisions  of  section  7  of  this  act,  to  be  no  longer  desirable,  subject, 
however,  to  the  contract  rights  of  its  borrowers,  and  the  vested  rights 
of  its  members. 

But  as  to  dissolution,  see  section  48  of  this  act.  See  also  sections  5687 
and  5688. 

Building  societies  are  to  be  wound  up  like  other  corporations  for  profit,  as  if 
dues  were  payments  on  stock  subscriptions.  If  all  members  have  stopped  paying 
dues,  a  borrowing  member's  stoppage  is  not  a  default  under  a  clause  making  his 
whole  amount  due  on  default.  Interest  continues  during  proceedings  to  wind  up, 
but  not  dues,  except  as  assessments  are  ordered:    Hinman  v.  Ryan,  3  C.  C.  529. 

Where  the  board  of  directors,  merely  as  such,  of  a  building  association  ask 
for  a  receiver,  without  asserting  an  individual  right  as  stockholders  or  otherwise, 
though  on  the  grounds  of  insolvency  and  inability  to  manage  the  affairs  of 
the  company,  the  court  has  no  power  to  grant  a  receiver  without  notice  to  or 
consent  of  stockholders.  Only  shareholders  can  apply  for  a  receiver:  Schone 
z:  Consolidated  B.  &  S.  Co.,  6  Low.  D.  246;  4  N.  P.  216. 

When  a  building  association,  by  general  consent  of  its  stockholders,  concludes 
to  cease  business  as  a  going  concern,  and  by  general  consent  the  closing  up  of 
its  affairs  is  left  in  the  hands  of  the  board  of  directors,  the  directors  retain  all 

[3«1] 


APPENDIX. 


the  power  they  previously  had  with  reference  to  the  disposal  of  the  assets  of  the 
association:  Roth  v.  St.  Clair  B.  and  L,  Co.  et  al.  (Superior  Court  of  Cincinnati, 
General  Term,   1902.)      (18   Dec,   154.) 

LOAN  ASSOCIATIONS.  ASSOCIATIONS  MAY  CONTRACT  FOR 
ATTORNEY'S  SERVICES  AFTER  AUDITOR  HAS  PLACED  CUSTODIAN 
IN  CHARGE.  The  act  of  the  State  Auditor  in  putting  a  custodian  in  charge 
of  the  assets  of  a  building  and  loan  association  does  not  deprive  the  association 
of  the  power  to  make  a  contract  for  services  of  attorneys  to  resist  the  appoint- 
ment of  a  receiver. 

SAME.  WHEN  COURT  MAY  ALLOW  FEES  TO  ATTORNEYS  RE- 
SISTING RECEIVERSHIP.  In  a  receivership  proceeding  against  a  building 
and  loan  association  the  court  has  power,  where  the  equities  of  the  case  so 
require,  to  allow  a  claim  for  attorney's  fees  for  services  rendered  to  the  asso- 
ciation in  resisting  the  receivership,  even  though  the  litigation  was  unsuccessful 
and  the  contract  of  employment  was  made  after  the  State  Auditor  had  placed  a 
custodian  in  charge  of  the  assets;  and  the  allowance  of  such  claim  is  binding 
upon  the  purchaser  of  the  assets  who  has  agreed  in  his  bid  "to  pay  in  full  the 
general  creditors  of  the  estate  such  claims  against  the  estate  as  may  be  allowed 
by  the  court."     Supreme  Court  of  Illinois,  Vol.  225  at  page  508. 

Sec.  20.  To  amend  its  articles  of  incorporation,  and  to  increase 
and  decrease  the  number  of  its  directors,  by  complying  with  all  the 
requirements  provided  in  its  own  constitution  for  the  amendment 
thereof,  and  the  other  officers  of  such  corporations  shall  consist  of 
a  president,  one  or  more  vice-presidents,  one  or  more  secretaries  and 
such  other  officers  as  its  constitution  and  by-laws  may  provide. 

This  right  to  amend  does  not  extend  to  a  substantial  change  of  the  original 
purpose  of  the  organization:    State  ex  rel  v.  Taylor,  55  O.  S.  67. 

Sec.  21.  To  provide,  by  constitution  adopted  by  its  members,  and 
by-laws  adopted  by  its  board  of  directors,  for  the  proper  exercise  of 
the  powers  herein  granted,  and  the  conduct  and  management  of  its 
affairs. 

Amending  the  constitution  and  by-laws  is  a  power  incidental  to  all  corpora- 
tions, and  though  this  may  be  limited  by  the  constitution,  mere  silence  does  not 
take  it  away:    Wangerien  v.  Aspell,  47  O.  S.  250,  260. 

By-laws  are  sufficiently  proved  if  appearing  on  the  records  and  uniformly 
acted  on.  Proof  of  a  formal  vote  of  adoption  is  not  necessary:  Hagerman  v. 
Ohio  B.  A.,  25  O.  S.  186. 

Sec.  22.  To  have  all  such  other  powers  as  are  necessary  and 
proper  to  enable  such  corporation  to  carry  out  the  purpose  of  its 
organization. 

While    the   law    neither    requires   the  directors   nor   gives   them    authority    to 

appoint  an   attorney,   yet   an   association  may  by  virtue   of   this   section    adopt  a 

constitution  providing  for  an  attorney:  New  German  Loan  and  Bldg.  Co.  v. 
Kuehnert,  6  O.   D.  502. 

REGULATIONS.    BONDS  OF  OFFICERS. 

Sec.  23.  The  board  of  directors  shall  designate  a  bank  or  banks, 
in  which  it  shall  cause  the  funds  of  such  corporation  to  be  deposited 
in  the  name  of  the  corporation,  and  such  funds  when  so  deposited,  can 

[382] 


APPENDIX. 

be  withdrawn  only  in  such  manner  and  for  such  purpose  as  may  be 
provided  in  the  constitution  and  by-laws  and  authorized  by  law. 

All  bank  books  showing  such  deposits  shall  be  open  to  the  inspec- 
tion of  any  director  at  any  time. 

All  officers  of  such  association  who  have  charge  or  possession  of 
money,  securities,  or  property,  shall  give  bond  before  entering  upon 
their  duties,  to  the  satisfaction  of  the  board  of  directors,  for  the 
faithful  performance  of  the  same,  and  the  safe  keeping  and  proper 
application  of  all  moneys  or  property  coming  into  their  hands.  All 
officers  of  such  corporations  on  being  re-elected  to  office  shall  renew 
their  bon-ds.  The  bond  may  be  increased  or  additional  securities 
required  at  any  time  by  the  board  of  directors.  Directors  shall  not 
be  eligible  as  bondsmen,  and  shall  be  individually  liable  for  any  loss 
to  members,  caused  by  their  neglect  to  comply  with  the  provisions 
of  this  section. 

As  to  bonds  of  building  association  officers  and  actions  thereon,  see  Building 
Ass'n  V.  Cummings,  45  O.  S.  664. 

An  attorney  for  an  association  is  not  an  officer:  New  German  Loan  and 
Bldg.  Co.  V.  Kuehnert,  6  O.  D.  502. 

His  bond  is  not  an  oficial  bond:    Id. 

Sureties  on  an  attorney's  bond  "during  his  continuance  in  office,"  his  appoint- 
ment being  at  pleasure,  are  liable  for  any  default  during  the  attorney's  incumb- 
ency, he  being  continued  in  office  from  time  to  time  without  giving  a  new 
bond :    Id. 

See  note  to  <;amp  rase  5   (.'*Rafi-4). 

This  would  include  entering  into  of  sufficient  bonds  by  the  president  and 
vice-president  of  an  association.     (Ruling  of  the  Department.) 

Each  officer  required  to  give  a  bond  must  have  at  least  two  sufficient  sureties 
thereon,  or  it  can  be  signed  by  a  surety  company  authorized  under  the  laws  of 
Ohio.     (Ruling  of  the  Department.) 

BONDS. 

[Hamilton  (1st)   Circuit  Court,  June  22,   1907.] 

Swing,  GiflFen  and  Smith,  JJ. 

EDWARD  DIENST  ET  AL.  V.  FISCHMANN  LOAN  &  BLDG.  CO. 

Subrogation  OF  Building  Association  against  General  Creditors. 
A  building  association  through  the  negligence  of  its  attorney  loaned  $1,000  to 
one  holding  a  defective  title  to  the  property  upon  which  he  gave  a  mortgage  to 
secure  the  loan.  The  mortgagor  died.  The  proceeds  of  the  loan  could  not  be 
traced  to  his  creditors,  but  were  probably  used  by  the  widow  in  satisfaction  of 
her  allowance  of  $1,500  for  the  first  year's  support  of  herself  and  minor  children. 
The  attorney  moved  out  of  the  jurisdiction  and  in  the  present  suit  on  his  bond 
service  could  not  be  obtained  upon  him:    Held, 

(1)  In  an  action  on  a  bond  which  is  in  the  nature  of  a  joint  obligation,  the 
fact  that  one  of  the  obligors  could  not  be  served  with  summons  because  not 
within  the  jurisdiction  of  the  court  does  not  prevent  the  taking  of  judgment 
against  obligors  who  are  within  the  jurisdiction. 

IFor  other  cases  in  point,  see  2  Cyc.  Dig.,  "Bonds,"  §§  834-847. — Ed.] 

(2)  The  building  association  was  without  remedy  on  its  mortgage  by  way  of 
subrogation  against  the  general  creditors  of  the  mortgagor  or  the  first  year's 
allowance  to  the  widow. 

[For  other  cases  in  point,  see  2  Cyc.  Dig.,  "Bonds,"  §§  1110-1116;  7  Cyc. 
Dig.,  "Subrogation,"  §§  8-23.— Ed.] 

(3)  The  attorney  having  knowledge  of  the  mistake  which  he  had  made,  notice 
to  him  or  his  bondsmen  of  the  loss  the  building  association  had  sustained  was 
not  necessary,  and  laches  or  estoppel  cannot  be  pleaded  in  their  behalf. 

[383] 


APPENDIX. 


RESERVE  FUND. 

Sec.  24.  The  amount  to  be  set  aside  to  the  Reserve  Fund,  for 
the  payment  of  contingent  losses  shall  be  determined  by  the  board  of 
directors,  but  in  all  permanent  or  perpetual  associations,  at  least  five 
per  cent  of  the  net  earnings  shall  be  set  aside  each  year  to  such  fund 
until  it  reaches  at  least  five  per  cent  of  the  total  assets.  All  losses 
shall  be  paid  out  of  such  fund  until  the  same  is  exhausted,  and  when- 
ever the  amount  in  said  fund  falls  below  five  per  cent  of  the  assets  as 
aforesaid,  it  shall  be  replenished  by  annual  appropriations  of  at  least 
five  per  cent  of  the  net  earnings  as  hereinbefore  provided  until  it 
again  reaches  said  amount. 

The  reserve  fund  belongs  pro  rata  to  all  members  whether  borrowers  or  not: 
Seibel  v.  Bldg.  Ass'n,  43  O.   S.  371,  375. 

Charges  made  from  the  contingent  fund  should,  in  each  instance,  show  for 
what  purposes  they  are  made.      (Ruling  of  the  Department.) 

DIVISION  OF  EARNINGS. 

Sec.  25.  All  expenses  of  such  association  shall  be  paid  out  of  the 
earnings  only,  and  so  much  of  the  earnings  as  may  be  necessary  shall 
be  set  aside  each  year  for  such  purpose.  But  charges  incident  to  a 
loan,  if  paid  by  the  borrower,  shall  not  be  deemed  a  part  of  the  cur- 
rent expenses. 

After  payment  of  expenses  and  interest,  a  portion  of  the  earnings 
to  be  determined  by  the  board  of  directors,  shall  also  be  placed 
annually  or  semi-annually  in  the  Reserve  Fund  for  the  payment  of 
contingent  losses,  as  hereinbefore  provided,  and  a  further  portion  of 
such  earnings,  to  be  determined  by  the  board  of  directors,  shall  be 
transferred  as  a  dividend  annually  or  semi-annually,  in  such  propor- 
tion to  the  credit  of  all  members  as  the  corporation,  by  its  constitu- 
tion and  by-laws,  may  provide,  to  be  paid  to  them  at  such  time  and  in 
such  manner  in  conformity  with  this  act  as  the  corporation  by  its 
constitution  and  by-laws,  may  provide.  Any  residue  of  such  earn- 
ings may  be  held  as  undivided  profits  to  be  used  as  other  earnings, 
provided,  however,  that  such  undivided  profit  fund  shall  at  no  time 
exceed  three  per  cent  of  the  total  assets  of  the  association. 

All  losses  shall  be  assessed  in  the  same  proportion  and  manner  on 
all  members  after  the  amounts  in  the  reserve  fund  and  the  undivided 
profit  fund  have  been  applied  to  the  payment  of  the  same. 

Prior  to  the  act  of  1886  dividends  were  to  be  declared  to  borrowers  and 
non-borrowers  alike  without  discrimination:  Seibel  v.  Bldg.  Ass'n,  43  O.   S.  371. 

After  that  act  the  society  could  confine  borrowers  to  dividends  on  the  previous 
six  months'  dues:  Deiringer  v.  Carlisle  Bldg.  Ass'n,  2  Ohio  Decision,  543. 

[384] 


APPENDIX. 


One  who  on  borrowing  is  fully  advised  as  to  how  dividends  are  declared  and 
received  them  for  8  or  9  years  on  that  basis,  and  allowed  other  members  to 
be  dealt  with  in  the  same  way,  and  to  recast  the  accounts  now  would  entail  great 
loss  on  the  sorietv,  will  be  estopped  to  deny  the  legality  of  the  division:  Buehl- 
man  v.  Atlantic  Bldg.  Ass'n,  6  C.  C.  285,  and  see  Deiringer  v.  Carlisle  B.  A., 
2  Ohio  Dec.  n4S  (aff'd  by  Supreme  Court,  no  report,  38  Bull.  328). 

No  dividends  could  be  allowed  in  1884  on  dues  paid  in  advance,  as  where 
$9,000  was  borrowed  and  $7,000  was  paid  back  two  years  later  and  credited  on 
weekly  dues:    Turner  Bau  Verein  v.  Woodburn,  27  Bull.  409. 

A  borrowing  member  is  one  who  receives  the  par  value  of  his  shares  in 
advance  and  agrees  to  pay  dues  and  interest  until  dues  and  undrawn  dividends 
equal  the  par  value  of  his  shares,  and  his  share  of  losses,  when  he  ceases  to  be 
a  member  and  is  entitled  to  a  cancellation  of  his  mortgage.  Eversmann  v. 
Schmitt,  53  O.  S.  174. 

Where  a  foreclosure  was  begun  in  December,  1896,  an  answer  that  the 
dividends  due  in  January,  1897,  will  pay  all  balances  due,  states  a  good  defense; 
for  when  the  par  value  of  the  stock  has  been  paid  this  satisfies  the  mortgage: 
Home  Bldg.  Ass'n  Co.  v.  Tenny,  8  Low.  D.  391;  7  N.  P.  130. 

A  member's  certificate  of  stock  contained  a  promise  to  pay  the  share  in  full 
in  five  years.  But  having  borrowed  the  amount  his  mortgage  to  the  society 
required  him  to  pay  until  the  amount  was  repaid:  Held,  the  mortgage  controls 
and  he  is  not  entitled  to  have  it  canceled  at  the  end  of  five  years,  though  bjr 
reason  of  defalcations  the  time  is  prolonged:  Haynes  v.  People's  B.  and  S. 
Ass'n,  3  Low.  D.  228;  2  N.  P.  181. 

The  premium  may  now  (B.  R.  S.  §  3836-3)  be  fixed  bv  by-laws  of  the  society. 
The  borrower  no  longer  has  a  right  to  fix  it  by  his  bid.  It  is  not  now  a  premium 
for  the  right  of  precedence,  but  is  a  premium  on  the  loan.  This  has  been  so 
since  1896.     People's  Sav.  and  Loan  Ass'n  v.  Roberts,  5  Low.  D.  489;  5  N.  P.  86. 

§  (3836-3)  in  giving  the  associations  an  exemption  from  the  usury  laws  if  a 
premium  fixed  by  them  without  competitive  bidding  exceeds  what  other  institu- 
tions may  charge,  grants  a  special  privilege  contrary  to  Const.  1,  2,  and  is  so  far 
void:  Mykrantz  v.  Globe  B.  and  Loan  Ass'n,  10  Cir.  D.  250;  19  C.  C.  (Aff's 
41  B.  262,  edit.).  Overruled;  see  Spies  v.  Southern  Ohio  Loan  and  Trust 
Company,  24  O    C.  C.  x^ 

A  borrowing  member  in  case  of  losses  is  like  a  non-borrower  assessable  on  all 
dues  and  earnings  which  should  stand  to  the  credit  of  his  stock  and  no  annual 
settlement  crediting  dues  paid  to  a  loan  and  rebating  interest  thereafter  can  limit 
the  liability  to  the  dues  of  the  current  year  only:  6  Low.  D.  95;  4  N,  P.  97; 
Main  St.  B.  and  L.  Co.  r.  Richter,  9  Cir.  D.  74;  16  C.  C.  191. 

A  borrowing  member  who  has  acquiesced  for  several  years  in  rebate  of 
interest  and  dividends  only  upon  the  current  year's  dues,  in  a  society  organized 
prior  to  the  law  of  1880,  is  estopped  to  demand  a  credit  of  dividends  on  the 
entire  amounts  paid  in  as  dues,  and  the  purchaser  of  his  property  is  also  estopped. 
Atlantic  B  Ass'n  v.  Vogeler,  5  Low.  D.  581;  7  N.  P.  606. 

Where  a  borrower's  dividends  were  wrongly  confined  to  dues  for  the  last  six 
months  only,  and  not  on  all  dues,  paid  in  his  silence  for  several  years,  does  not 
estop  him  to  object  to  the  mistake:  55  O.  S.  681;  Deiringer  v.  Carlisle  Bldg. 
Ass'n,  2  Low.  D.  543. 

Premiums  of  16^  cents  per  month  on  each  $100  share,  and  fines  of  10  cents 
per  month  during  default  of  dues  of  50  cents  per  month  on  each  such  share, 
imposed  by  a  building  and  loan  association  upon  a  borrowing  member  in  addition 
to  6  per  cent  interest  upon  his  loan,  are  not  in  the  nature  of  usury  or  unreason- 
able in  amount:  Spies  v.  Southern  Ohio  L.  and  T.  Co.,  (Lucas  (6th)  Circuit 
Court,  1902.)  24  O.  C.  C.  41. 

Section  3836-3  Rev.  Stat.,  in  exempting  building  and  loan  associations  from 
the  operation  of  the  usury  laws,  is  not  in  violation  of  Sees.  1  and  2,  Art.  1  of 
the  constitution:  Mykrantz  v.  Globe  B.  and  L.  Ass'n,  Circ.  Dec.  250  (19  R.  51), 
overruled. 

Losses  must  be  shared  by  borrowers  and  non-borrowers  alike:  Eversmann 
V.  Schmitt,  53  O.   S.  174. 

Where  borrowing  member's  mortgage  contained  a  stipulation  to  pay  such 
assessments  as  might  be  levied  on  him  as  a  member,  a  receiver  to  wind  up  the 
association  may  make  a  pro  rata  assessment  upon  him  to  meet  a  shortage,  and  he 
is  not  entitled  to  cancellation  of  the  mortgage  until  he  has  paid  the  assessment: 
Eversmann  v.  Schmitt,  53  O.  S.  174. 

If  a  certificate  of  stock  contains  a  promise  to  pay  the  share  in  full  in  five 
years,  but  the  mortgage  requires  dues  to  be  paid  until   the  loan  is  paid  in  full, 

[385] 


APPENDIX. 


the  mortgage  controls,  though  the  time  is  prolonged  by  defalcations.      Haines  v. 
People's  B.  A.,  2  N.  P.  181;  3  O.  D.  228. 

A  borrowing  member,  like  a  non-borrower,  is  assessable  for  losses  on  all 
dues  and  earnings  which  should  stand  to  the  credit  of  his  stock,  and  no  annual 
settlement,  crediting  dues  paid  to  a  loan  and  rebating  interest  thereafter,  can 
limit  the  liability  to  the  dues  of  the  current  year  only:  Main  St.  B.  and  L.  Co. 
V.  Richter,  16  C.  C.  191. 

TAXATION. 

Sec.  26.  The  shares  and  loans  advanced  to  its  members,  shall  be 
exempt  from  taxation,  except  shares  or  stock  upon  which  no  loans 
have  been  made  or  money  advanced  by  the  company,  shall  be  con- 
sidered and  held  as  credits,  and  the  said  members  individually  shall 
list  for  taxation  the  number  of  shares  held  by  them,  and  the  true 
value  thereof  in  money,  on  the  day  preceding  the  second  Monday  in 
April  each  year,  and  the  same  shall  be  assessed  at  such  valuation  for 
taxation  and  taxes  as  other  property. 

A  building  and  loan  association  advancing  or  paying  taxes  on  real  estate 
securities  mortgaged  to  it,  should  first  examine  carefully  the  provisions  of  House 
Bill  No.  339,  filed  in  the  office  of  the  Secretary  of  State  April  16,  1906,  entitled, 
"An  act  to  revise  Section  2847  of  the  Revised  Statutes  of  Ohio  and  to  further 
safeguard  the  real  estate  securities  of  banks  and  others,"  and  which  said  act 
is  as  follows: 
"Be  it  enacted  by  the  General  Assembly  of  the  State  of  Ohio: 

Section  1.  That  section  2847  of  the  Revised  Statutes  of  Ohio  as  amended 
April  19,  1904  (97  v.  100)  be  and  the  same  is  hereby  amended  so  as  to  read 
as  follows: 

Sec.  2847.  Every  person  holding  lands  as  aforesaid  shall  pay  the  tax  which 
may  be  assessed  thereon  each  and  every  year;  provided,  that  agents  and  attorneys 
shall  not  thus  be  obliged  to  pay  sucfi  taxes,  unless  sufficient  moneys  of  their 
principals  be  in  their  hands  to  pay  the  same;  and  provided,  further,  that  any 
persons  owning  lands  as  aforesaid,  may  authorize  or  consent  to  the  payment  by 
any  other  person,  of  the  taxes  levied  upon  such  lands,  and  any  person  so  paying 
such  taxes  shall  first  obtain  from  the  owner  or  owners  of  such  lands  a  certificate 
of  authority  to  pay  such  taxes  signed  in  the  presence  of  two  witnesses,  and  duly 
acknowledged  before  an  officer  authorized  to  administer  oaths,  which  certificate 
shall  contain  an  accurate  description  of  the  property  as  shown  by  the  tax 
duplicate,  the  amount  of  the  taxes  levied  thereon,  the  year  for  which  the  same 
were  levied  and  the  name  of  the  person  authorized  to  pay  the  same  and  the 
date  of  the  payment  thereof;  and  shall,  within  ten  days  from  the  date  of  the 
payment  of  such  taxes,  file  the  same  in  the  office  of  the  county  recorder  for 
record,  and  when  such  certificate  has  been  filed  as  aforesaid,  the  amount  thereof 
with  interest  at  the  rate  of  eight  per  cent  per  annum  from  the  date  of  the  pay- 
ment of  such  tax,  shall  operate  as  a  lien  upon  such  real  estate  in  preference  to 
all  liens  thereafter  attaching  to  the  property  and  in  preference  to  all  pre-existing 
liens,  the  holders  of  which  have  executed  and  acknowledged  such  certificate  of 
authority  and  the  money  so  paid,  together  with  the  interest  thereon,  may  also  be 
recovered  by  action  for  money  paid  to  his  use  against  the  person  or  persons 
legally  liable  for  the  payment  of  such  tax,  which  action  may  be  brought  by  such 
person  so  paying  such  tax  as  aforesaid,  at  any  time  after  the  expiration  of  one 
year  from  the  date  of  the  payment  thereof;  that  such  certificate  so  filed  as  afore- 
said with  the  county  recorder,  shall  be  recorded  and  cancelled  in  the  same  manner 
as  mortgages  on  real  estate,  in  a  book  to  be  separately  kept  and  indexed  by  him 
for  that  special  purpose,  and  such  recorder  shall  receive  such  fees  as  are  prescribed 
by  law  for  recording  real  estate  mortgages. 

Section  2.  That  section  2847  of  the  Revised  Statutes  of  Ohio  as  amended 
April  19,  1904   (97  v.  100)  be  and  the  same  is  hereby  repealed." 

See  Vol.  98  Laws  of  Ohio,  pages  285  and  286. 


[386] 


APPENDIX. 


INSPECTION. 

Sec.  27.  There  is  hereby  established  in  the  department  of 
insurance  a  bureau  to  be  known  as  the  bureau  of  Building  and  Loan 
Associations,  which  shall  be  charged  with  the  execution  of  the  laws 
of  this  state  relating  to  such  associations. 

Duty  under  act  to  regulate  certificate,  etc.,  companies,  etc.,  other  than  building 
and  loan  companies,  and  to  regulate  investment  guaranty  companies  doing  business 
on  the  service  dividend  plan,  see  §  382 Ir  et  seq. 

Sec.  28.  The  chief  officer  of  said  bureau  shall  be  known  as  the 
"Inspector  of  Building  and  Loan  Associations."  The  superintendent 
of  insurance  shall  ex-oflicio  be  also  such  inspector  and  as  compensa- 
tion for  his  services  as  such  inspector  he  shall  be  entitkd  to  receive 
such  compensation  as  provided  by  law.  Before  entering  upon  his 
duties,  he  shall  give  bond  to  the  state  of  Ohio  in  the  sum  of  ten 
thousand  dollars,  to  be  approved  by  the  governor,  conditioned  for 
the  faithful  discharge  of  his  duties,  and  the  bond,  with  his  oath  of 
office  and  the  approval  of  the  governor  endorsed  thereon,  shall  be 
filed  with  the  secretary  of  state. 

The  inspector  shall  appoint  a  deputy,  who  is  hereby  authorized  to 
perform  the  duties  attached  by  law  to  the  office  of  inspector,  and 
such  deputy  shall  receive  as  compensation  therefor  the  sum  of  three 
thousand  dollars  per  annum  and  this  salary  shall  be  in  full  for  all 
services  rendered  to  the  state  for  inspection  of  bond  investment  com- 
panies and  for  services  rendered  under  this  act. 

He  shall  also  appoint  such  clerks  and  examiners  as  may  be 
necessary. 

Sec.  29.  The  adjutant  general  shall  provide  suitable  accommoda- 
tions for  the  conduct  of  the  business  of  the  ^bureau  in  the  office  of 
the  superintendent  of  insurance  and  furnish  the  necessary  furniture, 
etc.,  and  the  expense  of  the  same  shall  be  paid  out  of  the  state 
treasury,  on  the  certificate  of  the  inspector  and  the  warrant  of  the 
adjutant  general. 

Sec.  30.  It  shall  be  the  duty  of  the  inspector  to  see  that  all  the 
laws  of  this  state  relating  to  building  and  loan  associations  and  to 
savings  associations  are  faithfully  executed. 

FOREIGN  ASSOCIATIONS. 

Sec.  31.  Foreign  building  and  loan  associations  doing  business  in 
this  state,  shall  conduct  the  same  in  accordance  with  the  laws  of  the 
state  governing  domestic  associations,  and  no  such  association  shall 
do  any  business  in  this  state  until  it  procures  from  the  inspector  a 

[387] 


APPENDIX. 

certificate  of  authority  to  do  so.  To  procure  such  authority,  such 
association  shall  comply  with  the  following  provisions : 

First.  It  shall  deposit  with  the  inspector  one  hundred  thousand 
dollars,  either  in  cash  or  bonds  of  the  United  States  or  the  State  of 
Ohio,  or  of  any  county  or  municipal  corporation  in  the  state  of  Ohio, 
satisfactory  to  the  inspector. 

Second.  It  shall  file  with  the  inspector  a  certified  copy  of  its 
charter,  constitution  and  by-laws,  and  other  rules  and  regulations 
showing  its  manner  of  conducting  business,  together  with  a  state- 
ment such  as  is  required  annually  from  all  associations. 

Third.  It  shall  also  file  with  the  inspector  a  written  instrument, 
duly  executed,  agreeing  that  a  summons  may  issue  against  it  from 
any  county  in  this  state,  directed  to  the  sheriff  of  the  county  in 
which  the  office  of  the  inspector  is  situate,  commanding  him  to  serve 
the  same  by  certified  copy  personally  upon  the  inspector  or  by  leav- 
ing a  copy  thereof  at  his  office.  The  inspector  shall,  however,  mail 
a  copy  of  any  papers  served  on  him,  postage  prepaid,  to  the  home 
office  of  such  association. 

Sec.  32.  Whenever  such  association  has  complied  with  the  pro- 
visions of  this  act,  and  the  inspector  is  satisfied  that  such  associa- 
tion is  doing  business  according  to  the  laws  of  this  state,  and  is  in 
sound  financial  condition,  he  shall  issue  his  certificate  of  authority 
to  such  association  to  do  business  in  this  state.  Annually  thereafter, 
upon  the  filing  of  the  annual  statement  herein  provided  for,  if  the 
inspector  shall  be  satisfied  as  aforesaid,  he  shall  issue  a  renewal  of 
such  certificate  of  authority. 

Sec.  33.  Such  foreign  association  may  collect  and  use  the  interest 
on  any  securities  so  deposited,  so  long  as  it  fulfills  its  obligations 
and  complies  with  the  provisions  of  this  act.  It  may  also  exchange 
them  for  other  securities  of  equal  value  and  satisfactory  to  the 
inspector. 

Sec.  34.  The  deposit  made  with  the  inspector  shall  be  held  as 
a  security  for  all  claims  of  residents  of  this  state  against  said  associa- 
tion, and  shall  be  liable  for  all  judgments  or  decrees  thereon  and 
subjected  to  the  payment  of  the  same  in  the  same  manner  as  the 
property  of  other  non-residents.  Should  any  association  cease  to  do 
business  in  this  state,  the  inspector  may  release  securities  in  his  dis- 
cretion, retaining  sufficient  to  satisfy  all  outstanding  liabilities. 

Sec  also  Section  148d  of  the  Revised  Statutes  of  Ohio. 

[388] 


APPENDIX. 

ANNUAL  REPORT  OF  ASSOCIATIONS. 

Sec.  35.  Every  building  and  loan  association  doing  business  in 
this  state  shall  annually,  at  the  end  of  each  fiscal  year,  or  within  forty 
days  thereafter,  make  a  full  and  detailed  report  in  writing  of  the 
affairs  and  business  of  the  association  for  the  preceding  year,  and 
showing  its  financial  condition  at  the  end  of  said  fiscal  year.  With  the 
first  report  made  by  any  association  it  shall  also  file  a  certified  copy  of 
its  constitution  and  by-laws  or  other  rules  and  regulations,  showing 
its  manner  of  doing  business. 

Sec.  36.  The  statement  shall  be  in  such  form  and  contain  such 
information  as  may  be  prescribed  by  the  inspector  of  building  asso- 
ciations. It  shall  be  sworn  to  by  the  secretary,  and  its  correctness 
attested  by  at  least  three  directors,  or  an  auditing  committee  appointed 
by  the  board.  The  original  shall  be  filed  with  the  inspector  of  build- 
ing associations  within  forty  days  after  the  close  of  the  fiscal  year, 
and  such  an  abstract  thereof  as  the  inspector  may  require  shall'  be 
posted  for  sixty  days  in  the  office  or  meeting  place  of  such  associa- 
tion, and  also  published  in  some  paper  regularly  issued  in  the  county 
in  which  said  association  is  located. 

EXAMINATION  OF  ASSOCIATIONS. 

Sec.  37.  The  inspector  shall  make  or  cause  to  be  made  by  some 
person  or  persons  by  him  appointed  for  that  purpose,  examinations 
into  the  affairs  of  every  such  association  at  least  once  in  each  year. 
The  expense  of  all  examinations  provided  for  herein  shall  be  paid  by 
the  State  of  Ohio;  provided,  that  when,  by  the  laws  of  any  other 
state,  district,  territory  or  nation,  examinations  of  such  associations 
of  this  state  are  required  or  permitted  to  be  made  by  any  official  or 
other  authority  of  such  other  state,  district,  territory,  or  nation,  at  the 
expense  of  such  associations,  then  the  expenses  of  all  such  examina- 
tions, made  by  the  inspector  of  this  state,  of  such  associations  of  such 
state,  district,  territory  or  nation,  shall  be  respectively  charged  to 
and  collected  from  such  associations  so  examined. 

Sec.  38.  Should  the  inspector,  upon  examination,  find  any  domestic 
association  conducting  its  business  in  whole  or  in  part  contrary  to 
law,  or  failing  to  comply  with  the  law,  he  shall  so  notify  the  board 
of  directors  of  such  association  in  writing,  and  if,  after  thirty  days, 
such  illegal  practices  or  failure  continue,  he  shall  communicate  the 
facts  to  the  attorney  general,  who  shall  cause  proceedings  to  be 
instituted  in  the  proper  court  to  revoke  the  charter  of  such 
association. 

[389] 


APPENDIX. 

Sec.  39.  Should  the  inspector  find,  upon  examination,  that  the 
affairs  of  any  such  association  are  in  an  unsound  condition,  and  that 
the  interests  of  the  public  demand  the  dissolution  of  such  associa- 
tion, and  the  winding  up  of  its  business,  he  shall  so  report  to  the 
attorney  general,  who  shall  institute  the  proper  proceedings  for  that 
purpose. 

Sec.  40.  Such  examiners  shall  have  access  to  and  may  compel  the 
production  of  all  the  books,  papers,  securities  and  moneys,  etc.,  of 
the  association,  under  examination.  They  shall  have  power  to  admin- 
ister oaths  to,  and  examine  the  officers  and  agents  of  such  associa- 
tions as  to  its  affairs. 

Sec.  41.  When  the  inspector  deems  it  to  the  interest  of  the  public, 
he  may  publish  the  result  of  such  examination  in  some  newspaper  of 
general  circulation  in  the  county  in  which  such  association  is  located, 
if  it  be  a  domestic  association,  and  in  some  newspaper  in  the  city 
of  Columbus,  Ohio,  if  it  be  a  foreign  association. 

Sec.  42.  Should  the  inspector  find,  upon  examination,  that  any 
foreign  association  does  not  conduct  its  business  in  accordance  with 
the  law,  or  that  the  affairs  of  any  such  association  are  in  an  unsound 
condition,  or  if  such  association  refuses  to  permit  examination  to  be 
made,  he  may  cancel  the  authority  of  such  association  to  do  business 
in  this  state,  and  cause  a  notice  thereof  to  be  mailed  to  the  home 
office  of  the  association,  and  to  be  published  in  at  least  one  news- 
paper published  in  the  city  of  Columbus.  After  the  publication  of 
such  notice,  it  shall  be  unlawful  for  any  agent  of  said  association 
to  receive  any  further  stock  deposits  from  members  residing  in  this 
state,  except  payments  on  stock  on  which  a  loan  has  been  taken. 

FEES. 

Sec.  43.  Foreign  building  and  loan  associations  shall  pay  to  the 
inspector  the  following  fees,  to  wit:  For  filing  each  application  for 
admission  to  do  business  in  this  state,  one  hundred  dollars.  For  each 
certificate  of  authority  and  annual  renewal  of  same,  fifty  dollars; 
both  foreign  and  domestic  associations  shall  pay  to  the  inspector  for 
filing  each  annual  statement,  as  follows:  If  the  assets  of  the  associa- 
tion, as  shown  by  the  statement  filed,  amount  to  $50,000.00  or  less, 
$3.00;  if  more  than  $50,000.00  and  less  than  $100,000.00,  $5.00;  if 
more  than  $100,000.00  and  less  than  $250,000.00,  $10.00 ;  if  more  than 
$250,000.00  and  less  than  500,000.00,  $20.00;  if  more  than  $500,000.00 
and  less  than  $1,000,000.00,  $30.00;  if  more  than  $1,000,000.00,  $50.00. 
For  each  copy  of  a  paper  filed  in  his  office,  twenty-five  cents  per  folio. 

[390] 


APPENDIX. 

For  affixing  the  seal  of  office  and  certifying  any  paper,  one  dollar. 
The  fees  provided  for  herein  shall  be  deposited  by  said  inspector, 
with  the  state  treasurer  upon  the  warrant  of  the  state  auditor. 

Sec.  44.  All  securities  of  cash  deposited  with  the  inspector  shall 
be  immediately  deposited  with  the  treasurer  of  state,  who,  with  his 
sureties,  shall  be  responsible  for  the  safekeeping  thereof.  The  treas- 
urer shall  deliver  such  securities  only  upon  the  written  order  of  the 
inspector  of  building  associations. 

PENALTIES. 

Sec.  45.  It  shall  be  unlawful  for  any  building  and  loan  associa- 
tion to  do  business  in  this  state  without  having  first  complied  with  the 
provisions  of  this  act,  and  any  association  violating  any  of  the  pro- 
visions of  this  act,  or  failing  to  comply  with  any  of  its  provisions, 
shall-  be  fined  not  less  than  fifty  nor  more  than  one  thousand  dol- 
lars, to  be  recovered  by  an  action  in  the  name  of  the  state,  and  on 
collection  paid  into  the  state  treasury. 

Sec.  46.  Every  president,  director,  trustee,  member  of  any  com- 
mittee, secretary,  treasurer,  attorney  or  any  other  officer  at  any  time 
created,  or  agent  of  any  such  corporation,  who  embezzles,  abstracts  or 
willfully  misapplies  any  of  the  moneys,  funds  or  credits  of  such  cor- 
poration, or  who  issues  or  puts  into  circulation  any  warrant  or  other 
order,  or  who  assigns,  transfers,  cancels  or  delivers  up  any  note,  bond, 
draft,  mortgage,  judgment,  decree,  or  any  other  written  instrument 
belonging  to  such  corporation,  or  raises  money  otherwise,  or  receives 
money  from  any  member  or  other  person  for  and  in  the  name  of 
such  corporation,  unless  duly  authorized  by  the  board  of  directors 
of  such  corporation;  or  who  shall  sign  the  name  of  any  person  to 
an  order  or  warrant  for  the  payment  of  money  without  proper 
power  of  attorney  or  written  order  from  such  person  to  whose  order 
such  warrant  or  order  is  made  payable ;  or  any  member  or  members 
of  the  board  of  directors  who  shall  vote  to  declare,  or  any  financial 
or  first  secretary  of  such  corporation  who  shall  declare  or  advise 
the  board  of  directors  of  such  corporation  to  declare  a  greater 
dividend  than  what  has  been  actually  earned  by  the  corporation,  for 
the  purpose  of  deceiving  the  people  or  defrauding  the  members  of 
such  corporation ;  or  who  certifies  to  or  makes  any  false  entry  on  any 
book,  report  or  statement  of  or  to  such  corporation,  with  intent  in 
cither  case  to  deceive,  injure  or  defraud  the  corporation  or  any 
other  company,  body  politic  or  corporate,  or  any  individual  person, 
or  to  deceive  anyone  appointed  to  examine  the  affairs  of  such  cor- 

[m] 


APPENDIX. 

poration;  and  every  person  who  with  like  intent  aids  or  abets  any 
president,  secretary,  treasurer,  committee  or  other  officer  or  person  in 
any  violation  of  this  section  shall  be  deemed  guilty  of  a  felony,  and 
shall  be  imprisoned  not  less  than  one  year  nor  more  than  ten  years, 
and  shall  be  liable  civilly  to  the  party  injured,  to  the  extent  of  such 
damage  thereby  incurred,  and  suit  may  be  brought  against  such 
person  and  the  sureties  on  his  bond  given  to  such  corporation  for  the 
faithful  performance  of  his  duty.  Any  officer  whose  duty  it  is,  fail- 
ing to  make  the  reports  required  by  this  act,  and  any  officer,  employe, 
or  other  person,  who  solicits  business  for,  aids  or  assists  any  build- 
ing and  loan  association  to  do  business  contrary  to  the  provisions  of 
this  act,  or  without  having  complied  with  its  provisions,  shall  be 
guilty  of  a  misdemeanor,  and  on  conviction  thereof  shall  be  fined 
not  more  than  five  hundred  dollars,  or  imprisoned  not  more  than  six 
months,  or  both.  Such  fines,  when  collected,  to  be  paid  into  the 
state  treasury. 

Sec.  47.  The  inspector  shall  keep  and  preserve  in  permanent  form 
a  full  record  of  his  proceedings,  including  a  concise  statement  of 
each  association  examined,  and  he  shall,  annually,  make  a  report  to 
the  General  Assembly  of  the  general  conduct  and  condition  of  the 
building  and  loan  associations  doing  business  in  this  state,  with  such 
suggestions  as  he  may  deem  expedient.  Such  report  shall  also  include 
the  information  contained  in  the  statements  required  of  the  associa- 
tions, and  arranged  in  tabulated  form.  He  shall  also  report  the  names 
and  compensation  of  the  clerks  employed  by  him,  the  whole  amount 
of  the  income,  the  source  whence  derived,  and  the  expense  in  detail, 
during  the  year  ending  on  the  thirty-first  day  of  December. 

Sec.  48.  Building  and  loan  associations  and  savings  associations 
shall  be  authorized  to  provide  in  their  constitutions  and  by-laws  for 
the  time  and  terms  of  the  dissolution  of  such  corporations ;  also  for 
the  consolidation  for  two  or  more  of  such  corporations  into  one,  upon 
such  terms  and  conditions  as  may  be  determined  upon  by  their  boards 
of  directors ;  also,  in  the  case  of  the  dissolution  of  any  such  corpora- 
tion, its  board  of  directors  may,  by  a  majority  vote,  be  authorized  to 
sell  and  transfer  its  mortgage  securities  or  other  property,  or  both, 
to  another  corporation^  person,  or  persons  subject  always  to  the  con- 
tract rights  of  the  mortgagors. 

Sec.  49.  The  following  acts  and  parts  of  acts  are  hereby  repealed, 
to  wit,  sections  1,  2,  3,  4,  5,  6,  7,  8,  9,  10,  11,  12,  13,  14,  15,  16, 
17,  18,  19,  20,  21,  22,  23,  24,  25,  and  26,  of  an  act  entitled,  "An  act  to 

[302] 


APPENDIX. 

provide  for  the  organization,  regulation  and  inspection  of  building 
and  loan  associations,"  passed  May  1,  1891,  (Vol.  88,  page  469.) 

Also  section  1  of  an  act  entitled,  "An  act  to  provide  for  the  dis- 
solution and  consolidation  of  building  and  loan  associations"  as 
passed  April  27,  1893.     (Vol.  90,  page  315.) 

Also  sections  3836-18  and  3836-22  of  an  act  passed  May  12,  1902, 
(Vol.  95,  pages  614-615),  entitled,  "An  act  to  amend  sections  3836-18 
and  3836-22  of  the  Revised  Statutes  of  Ohio." 

Also  section  3a  of  an  act,  passed  March  18,  1904,  (Vol.  97,  page 
43),  as  to  investment  of  funds,  entitled,  "An  act  to  supplement  sec- 
tion 3  of  an  act  entitled  'An  act  to  provide  for  the  organization, 
regulation  and  in«pection  of  Building  and  Loan  Associations' "  passed 
May  1,  1891. 

Also  section  3  of  an  act,  passed  March  31,  1906  (Vol.  98,  page 
173),  relating  to  minors,  entitled  "An  act  to  amend  section  3  of  an 
act  to  provide  for  the  organization,  regulation  and  inspection  of 
Building  and  Loan  Associations,"  passed  May  1,  1891,  and  all  acts 
or  parts  of  acts  inconsistent  herewith  are  repealed. 

Freeman  T.  Eagleson, 
Speaker  of  the  House  of  Representatives. 
James  M.  Williams, 

President  of  the  Senate. 
Passed  May  1,  1908. 
Approved  May  11,  1908. 

Andrew  L.  Harris,  Governor. 

Sec.  5687.  (Directors  may  appoint  trustees  to  settle  affairs  of 
corporations.)  The  board  of  directors  or  other  officers  having  the 
control  and  management  of  any  corporation  in  this  state,  may  appoint 
three  trustees  to  adjust  and  settle  the  affairs  of  such  corporation,  and 
the  trustees  so  appointed  shall  be  authorized  to  use  the  corporate 
name  of  the  corporation,  for  such  period  as  may  be  necessary  for  the 
adjustment  and  settlement  of  its  affairs,  by  suit  or  otherwise.  (50  v. 
272,  §2;  S.  &C.  367. 

Sec.  5688.  (Removal  and  duties  of  trustees.)  The  trustees  so 
appointed  shall  report  annually  to  the  stockholders  of  the  corporation 
a  full  and  succinct  statement  of  its  affairs;  and  a  majority  in  interest 
of  the  stockholders  may  remove  a  trustee,  or  appoint  a  person  to  a 
vacancy  occasioned  by  the  death,  resignation,  or  removal  of  a  trustee. 
(50  V.  272,  §§3,  4;   S.  &  C.  367.) 

[393] 


APPENDIX. 

DIVIDENDS. 

(3269-1)  Sec.  1.  (Corporate  dividends  to  he  paid  from  surplus 
profits  only.)  Be  it  enacted  by  the  General  Assembly  of  the  State  of 
Ohio,  That  it  shall  not  be  lawful  for  the  directors  of  any  corporation 
organized  under  the  laws  of  this  state  to  make  dividends  except  from 
the  surplus  profits  arising  from  the  business  of  the  corporation. 
(1888,  April  11;  85  v.  182.) 

(3269-2)  Sec.  2.  (Unpaid  interest  due  corporation  not  to  he 
included  in  profits.)  In  the  calculation  of  the  profits  of  any  corpora- 
tion previous  to  a  dividend,  interest  then  unpaid,  although  due,  on 
debts  owing  to  the  company,  shall  not  be  included.  (1888,  April  11; 
85  V.  182.) 

(3629-3)  Sec.  3.  Surplus  profits:  how  ascertained ;  prohihiting 
advertisement  of  capital  not  subscrihed  and  paid  in.)  In  order  to 
ascertain  the  surplus  profits,  from  which  alone  a  dividend  can  be 
made,  there  shall  be  charged  in  the  account  of  profit  and  loss,  and 
deducted  from  the  actual  profits 

1.,  All  the  expenses  paid  or  incurred,  both  ordinary  and  extra- 
ordinary, attending  the  management  of  the  affairs  and  the  transaction 
of  the  business  of  the  corporation. 

2.  Interest  paid,  or  then  due  or  accrued  on  debts  owing  by  the 
corporation. 

3.  All  losses  sustained  by  the  corporation,  and  in  the  computation 
of  such  losses,  all  debts  owing  to  the  corporation  shall  be  included 
which  shall  have  remained  due  without  prosecution,  and  no  interest 
having  been  paid  thereon  for  more  than  one  year,  or  on  which  judg- 
ment shall  have  been  recovered,  and  shall  have  remained  for  more 
than  two  years  unsatisfied,  and  on  which  no  interest  shall  have  been 
paid  during  that  period;  and  no  such  corporation  shall  advertise  a 
larger  amount  of  capital  stock  than  has  actually  been  subscribed  and 
paid  in;  also,  shall  not  advertise  a  greater  dividend  than  what  has 
been  actually  earned  and  credited  or  paid  to  its  stockholders  or  mem- 
bers.   (1889,  April  10;   86  v.  228;   85  v.  182,  183.) 

Borrowing  members  whose  interest  is  rebated  each  year  are  not  entitled  to 
dividends  except  upon  the  current  year's  dues:  Atlantic  B.  Ass'n  v.  Vogeler, 
5  Low.  D.  581;  7  N.  P.  606. 

(3269-4)  Sec.  4.  (Penalty  for  violation  of  section  3.)  Every 
director  who  shall  violate,  or  be  concerned  in  violating,  any  provision 
of  the  preceding  sections  of  this  act  contained,  shall  be  liable  person- 
ally to  the  creditors  and  stockholders  respectively  of  the  corporation 
of  which  he  shall  be  a  director,  to  the  full  extent  of  any  loss  they 

[394] 


APPENDIX. 

may  respectively  sustain  from  such  violation.     (1888,  April  11;    85 
V.  182,  183.) 

§  (3269-5)  was  changed  by  the  legislature  to  §  liSd. 

Sec.  3229.  (Corporation  thereby  created,  and  its  general  powers.) 
Upon  such  filin-g  of  the  articles  of  incorporation,  the  persons  who  sub- 
scribed the  same,  their  associates,  successors,  and  assigns,  by  the  name 
and  style  provided  therein,  shall  thereafter  be  deemed  a  body  cor- 
porate, with  succession,  and  power  to  sue  and  be  sued,  contract  and 
be  contracted  with,  acquire  and  convey  at  pleasure  all  such  real  or 
personal  estate  as  may  be  necessary  and  convenient  to  carry  into  effect 
the  objects  of  the  incorporation,  to  make  and  use  a  common  seal,  the 
same  to  alter  at  pleasure,  and  to  do  all  needful  acts  to  carry  into 
effect  the  object  for  which  it  was  created.    (50  v.  274,  §3 ;  S.  &  C.  273.) 

A  contract  made  with  a  company  before  it  is  incorporated,  is  void  for  the 
want  of  mutuality:    Turnpike  Co.  r.  Coy,  13  O.  S.  84. 

A  deed  was  executed  by  S.  in  his  name,  as  president,  and  under  his  own 
seal.     Held  not  to  be  the  deed  of  corporation:    Hatch  v.  Barr,  1  O.  390. 

Where  contract  has  been  performed  by  either,  the  other  will  be  estopped  to 
insist  that  contract  was  ultra  vires:  Hays  v.  Galion  G.  L.  &  C.  Co.,  29  O.  S.  330. 

See  case  of  Ehrman  v.  Insurance  Co.,  35  O,  S.  324,  under  §  3235. 

An  executory  agreement  between  a  manufacturing  corporation  of  this  state 
and  one  of  its  stockholders,  for  the  purchase  of  the  stock  of  such  corporation 
by  the  former  from  the  latter,  cannot  be  enforced,  either  by  action  for  specific 
performance  or  for  damages:    Coppin  v.  Greenlees  &  Ransom  Co.,  88  O.  S.  275. 

Filing  the  articles  do  not  make  a  corporation,  but  are  simply  authority  to  do 
so.  There  is  no  corporation  until  the  requisite  stock  is  taken  and  paid  and  the 
directors  chosen:    State  v.  Ins.  Co.,  49  O.  S.  440. 

A  corporation  comes  into  existence  as  soon  as  articles  of  incorporation  are 
filed:    State  ex  rel.  r.  Robinson  (Ham.  Dist.  Court),  12  W.  L.  B.  269. 

A  chattel  mortgage  executed  by  the  president  and  secretary  of  a  corporation 
who  are  members  of  the  board  of  directors,  executed  to  secure  a  corporation 
debt,  without  the  knowledge  of  the  directors  is  valid  as  to  the  mortgagee  who 
had  no  knowledge  of  that  fact:  Bosche  v.  Toledo  Horse  Display  Co.,  14  C.  C. 
292;  7  O.  D.  374. 

A  corporation  may  give  a  chattel  mortgage  to  secure  an  antecedent  loan  created 
for  carrying  on  its  business,  and  it  is  not  void  against  creditors,  there  being  no 
intention  at  the  time  to  cease  business;  although  afterwards  threatened  with 
attachment,  it  asks  for  a  receiver:  Bosche  v.  Toledo  Horse  Display  Co.,  14 
C.  C.  292;  7  O.  D.  374. 

A  corporation  cannot  give  a  secret  inchoate  preference,  allowing  other 
creditors  to  give  it  credit,  and  by  a  signal  previously  given,  allow  this  inchoate 
secret  preference  to  be  made  absolute  to  the  exclusion  of  the  other  creditors: 
Benedict  et  al.  v.  Market  National  Bank  et  al.,  4  X.  P.  231;  6  O.  D.  320. 

Sec.  3262.  (Increase  of  capital  stock.)  A  corporation  for  profit, 
after  its  original  capital  stock  is  fully  subscribed  for,  and  an  install- 
ment of  ten  per  cent  on  each  share  of  stock  has  been  paid  thereon,  or 
a  corporation  not  for  profit,  having  a  capital  stock,  may  increase  its 
capital  stock  or  the  number  of  shares  into  which  its  capital  stock  is 
divided,  by  the  unanimous  written  consent  of  all  original  subscribers, 
if  done  prior  to  organization,  and  after  organization  then  by  a  vote  of 
the  holders  of  a  majority  of  its  stock,  at  a  meeting  called  by  a 

[395] 


APPENDIX. 

majority  of  its  directors,  at  least  thirty  days'  notice  of  the  time,  place 
and  object  of  which  has  been'  given  by  publication  in  some  newspaper 
of  general  circulation,  and  by  letter  addressed  to  each  stockholder 
whose  place  of  residence  is  known ;  or  such  increase  may  be  made  at 
any  meeting  of  the  stockholders  at  which  all  the  holders  of  such 
stock  are  present  in  person,  or  by  proxy,  and  waive  in  writing  such 
notice  by  publication  and  by  letter ;  and  also  agree  in  writing  to  such 
increase,  naming  the  amount  of  increase  to  which  they  agree;  and  a 
certificate  of  such  action  of  the  corporation  shall  be  filed  with  the 
secretary  of  state.  (90  v.  141;  83  v.  134;  80  v.  23;  Rev.  Stat.  1880; 
69  V.  24;  70  v.  37,  §  1.) 

Where  stock  issue  has  been  irregular,  but  s-tockholder  has  acquiesced,  he  is 
bound  on  stock  liability:    Clarke  v.  Thomas,  34  O.  S.  46. 

Stock  must  be  fully  paid  up  before  right  to  increase  capital  stock  accrues: 
Peter  v.  The  Union  Manfg.  Co.,  et  al.,  56  O.  S.  200. 

Sec.  3258  The  stockholders  of  a  corporation  who  are  the  holders 
of  its  shares  at  a  time  when  its  debts  and  liabilities  are  enforcible 
against  them,  shall  be  deemed  and  held  liable,  equally  and  ratably, 
and  not  one  for  another,  in  addition  to  their  stock,  in  an  amount 
equal  to  the  stock  by  them  so  held,  to  the  creditors  of  the  corporation, 
to  secure  the  payment  of  such  debts  and  liabilities;  and  no  stock- 
holder who  shall  transfer  his  stock  in  good  faith,  and  such  transfer 
is  made  on  the  books  of  the  company,  or  on  the  back  of  the  certificate 
of  stock  properly  witnessed  or  tendered  for  transfer  on  the  books 
of  the  company  prior  to  the  time  when  such  debts  and  liabilities  are 
so  enforcible,  shall  be  held  to  pay  any  portion  thereof.  Provided, 
however,  that  the  above  provisions  of  this  section  shall  not  apply  to 
stockholders  in  any  corporation  created  after  the  twenty-third  of 
November,  1903,  nor  shall  it  apply  to  any  debts  or  liabilities  of  any 
corporation  incurred  after  said  date;  and  as  to  all  debts  and  liabilities 
of  corporation  for  profit  incurred  after  said  date,  the  stockholders 
of  said  corporations  shall  be  under  no  liabilities  other  than  those 
stated  in  article  XIII,  section  three,  of  the  constitution  of  Ohio. 

Sec.  3258a.  An  action  upon  the  liability  of  stockholders  under 
the  last  preceding  section,  can  only  be  brought  within  eighteen  months 
after  the  debt  or  obligation  shall  become  enforcible  against  stock- 
holders. 


[396] 


APPENDIX. 


FEE  BILL  OF  SECRETARY  OF  STATE. 

As  THE  Same  Applies  to  Building  and  Loan  Associations  Organized  Under 
THE  Laws  of  Ohio. 

For  filing  articles  of  incorporation  of  a  building  and  loan  association....   $10  00 
For  filing  a  certificate  of  increase  of  capital  stock  of  any  such  association.  .     5  00 

For  filing  a  certificate  of  reduction  of  capital  stock  of  any  corporation 5  00 

For  filine  a  copy  of  the  decree  of  court  changing  the  name  of  any  cor- 
poration           5  00 

For  filing  a  certified  copy  of  the  acceptance  by   any  corporation  incorpo- 
rated prior  to  the  adoption  of  the  present  constitution  of  any  of  the 

provisions  of  the  Revised  Statutes 5  00 

For  filing  an  amendment  to  articles  of  incorporation  of  any  corporation...     5  00 
For   filing   for   any   corporation   a   certificate   of  extension   of   purpose   or 

change  of  domicile 5  00 

For  filing  other  certificates  not  hereinbefore  enumerated 5  00 

For  filing  the   certificate   of  subscription   required  to  be  filed   by   Section 

3244   of  the  Revised   Statutes 2  00 

For  making  a  certificate  under  the  great  seal  of  the  State 1  00 

For  recording  miscellaneous  records,  papers  or  other  documents  required 
by  law  to  be  recorded  in  the  office  of  the  Secretary  of  State,  20  cents 
a  hundred  words. 
For  making  copies,  10  cents  a  hundred  words. 
For  affixing  seal  of  office  to  copies 50 

The  statutes  provide  that  all  fees  collected  by  the  Secretary  of 
State  shall  be  paid  into  the  State  Treasury;  and  that  he  shall  neither 
file  nor  record  any  of  the  articles  of  incorporation,  certificates  or 
other  papers  hereinbefore  referred  to  unless  the  fees  for  filing  same 
are  first  duly  paid. 


[39' 


APPENDIX. 


Rights  Granted  and   Liabilities  Imposed 
by  the  New  Ohio   Law. 


Subject  to  the  provisions  of  the  Constitution  and  By-Laws 

(C.  J.  McKEE) 

Sec.  7.  To  issue  stock  to  members  on  such  terms  and  conditions 
as  the  constitution  and  by-laws  may  provide.  To  permit  subscribers 
for  stock  to  vote  the  amount  of  stock  subscribed  for,  not  to  exceed 
20  shares. 

Sec.  8.  To  assess  and  collect  from  members  and  others,  dues, 
interest  and  premium  on  loans  made  or  other  assessments. 

Sec.  9.  To  permit  members  to  withdraw  all  or  part  of  their  stock 
deposits  at  such  time  and  upon  such  terms  as  the  constitution  and 
by-laws  may  provide.  To  permit  withdrawal  of  deposits  upon  such 
terms  and  conditions  as  the  Association  may  provide,  except  by  check 
or  draft. 

Sec.  14.  To  loan  money  on  such  terms  and  conditions  as  are 
provided  by  the  Association. 

Sec.  15.  To  require  borrowers  to  pay  all  fines  or  other  assess- 
ments required  by  the  constitution  and  by-laws. 

Sec.  17.  To  make  annual  or  semi-annual  distribution  of  earnings 
as  is  hereinafter  provided,  and  as  the  constitution  and  by-laws  may 
provide. 

Sec.  19.    To  dissolve  the  corporation. 

Sec.  20.  To  amend  articles  of  incorporation.  To  increase  the 
number  of  directors.  To  decrease  the  number  of  directors.  To 
provide  officers  additional  to  President,  one  or  more  Vice-Presidents, 
and  one  or  more  Secretaries. 

Sec.  21.  To  provide  for  the  proper  exercise  of  powers  granted  in 
the  act  and  the  conduct  and  management  of  the  afifairs  of  the 
Association. 

Sec.  23.  To  provide  the  manner  in  which,  and  the  purpose  for 
which,  funds  may  be  withdrawn  from  bank. 

Sec.  25.  To  provide  for  the  proportion  and  time  of  payment  of 
dividends  to  members. 

[308] 


CONSTITUTION.* 


ARTICLE  I. 

NAME    AND    LOCATION. 

Section  1.    The  name  of  this  Association  shall  be 

and  its  principal  office  shall  be  located  in 

,    in County,    in   the 

State  of  Ohio. 

ARTICLE  II. 

PURPOSE. 

Section  1.  This  Association  is  organized  for  the  purpose  of 
raising  money  to  be  loaned  to  its  members  and  others,  and  for  such 
other  purposes  as  are  authorized  by  law. 

ARTICLE  III. 

CAPITAL    STOCK. 

Section  1.    The  capital  stock  shall  be  $ divided  into 

shares  of  $ each. 

Sec.  2.  Stock  may  be  issued  to  members  in  whole  or  fractional 
shares  upon  such  terms  and  conditions  as  the  By-Laws  may  provide. 

ARTICLE  IV. 

members. 
Section  1.  Any  one,  upon  subscribing  for,  or  in  any  manner 
becoming  entitled  to,  or  the  owner  of  any  part  of  the  capital  stock  of 
this  Association,  shall  be  deemed  a  member  thereof  and  a  stockholder 
therein  to  the  extent  of  the  balance  of  his  credits  of  record  on 
account  of  said  stock. 

Sec.  2.  At  all  meetings  of  the  members,  each  member  having 
stock  of  record  for  at  least  30  days  prior  thereto,  shall  be  entitled 
either  in  person  or  by  proxy  held  by  a  member,  to  one  vote  for  each 
share  of  stock,  and  a  proportionate  fractional  vote  for  each  fractional 
share  of  stock,  so  held  of  record  by  him,  and  on  which  all  past  due 


*  Specimen  Constitution   prepared  by   the   Ohio   Building  Association   League 
Committee. 

[39»] 


APPENDIX. 

installments  of  dues  and  other  charges  have  been  fully  paid,  but  no 
member  shall  cumulate  his  votes,  and  no  member  shall  vote  more 
than  twenty  shares  held  in  his  own  right. 

ARTICLE  V. 

ANNUAL   MEETINGS. 

Section  1.  An  annual  meeting  of  the  members  of  this  Association 
for  the  election  of  Directors,  the  consideration  of  amendments  to  this 
Constitution,  and  for  the  transaction  of  all  other  proper  business  shall 
be  held  at  the  office  of  the  Association,  or  at  such  other  place  as  the 

Board  of  Directors  may  appoint,  on  the day  of 

of  each  year,  o'clock m. 

Sec.  2.  Should  the  Board  of  Directors  appoint  any  place  other 
than  the  office  of  the  Association  for  such  meeting,  they  shall  publish 
a  notice  of  the  same,  in  some  newspaper  regularly  issued  in  and  of 
general  circulation  in County,  Ohio. 

Sec.  3.  All  elections  for  Directors  shall  be  by  ballot,  and  the  polls 
for  voting  shall  be  kept  open  from  7  :00  p.  m.  until  9  :00  p.  m.  They 
shall  be  conducted  by  two  judges  and  two  clerks,  previously  appointed 
by  the  Board.  A  plurality  of  the  votes  cast  shall  be  sufficient  to  elect, 
and  in  case  of  a  tie  between  candidates,  it  shall  be  decided  by  lot. 

Sec.  4.    The  members  present  shall  constitute  a  quorum. 

Sec.  5.  Candidates  for  Directors  may  be  nominated  by  any  mem- 
ber by  filing  the  names  of  the  same  with  the  Secretary  at  least  two 
weeks  prior  to  the  election. 

ARTICLE  VI. 
♦weekly  meetings. 
Section  1.  Weekly  meetings  of  the  Association  and  the  Board 
of  Directors,  for  the  receipt  of  money,  the  making  of  loans,  and  for 
the  transaction  of  all  the  ordinary  business  of  the  Association,  shall 
be  held  at  the  office  of  the  Assciation  at  such  times  as  the  By-Laws 
may  provide. 

ARTICLE  VII. 
directors  and  officers. 

Section  1.    This  Association   shall   have  a   Board   of 

Directors,  elected  by  the  members  in  such  number  at  each  annual 
meeting,  to  serve  for  such  times  that  the  terms  of  one-third  of  the 
Directors  as  nearly  as  may  be  will  expire  each  year. 


*  To   associations  that  have  weekly   meetings  as  their   only   office  hours   the 
above  is  recommended.    Otherwise  see  Sec.  3,  Art.  VII. 

[400] 


APPENDIX. 

Sec.  2.  The  Directors  shall  choose  annually  a  President,  one  or 
more  Vice-Preside rts.  fr^m  their  number,  and  a  Secretary,  Treas- 
urer and  Attorney,  who  may  or  may  not  be  members  of  the  Board. 
They  may  create  such  committees  as  they  may  deem  necessary. 

Sec.  3.  The  Directors  shall  hold  at  least  one  meeting  each  week 
at  such  time  and  place  as  they  may  select,  or  as  the  By-Laws  may 
provide;  members  shall  constitute  a  quorum. 

Sec.  4.  The  Directors  shall  have  the  right  to  fill  all  vacancies 
occurring  in  their  own  body,  or  in  any  of  the  offices  of  the  Associa- 
tion, for  the  unexpired  term. 

Sec.  5.  The  Directors  shall  fix  the  salaries  and  determine  the 
compensation  of  all  officers  and  employes  of  the  Association,  and  they 
may,  at  their  discretion,  remove  or  suspend  any  officer  or  employe 
for  malfeasance  in  office  or  neglect  of  his  duties. 

Sec.  6.  The  Directors  shall  have  the  power  to  adopt,  amend, 
repeal  and  enforce  such  By-Laws,  resolutions  and  orders  as  they  may 
deem  necessary  to  enable  them  to  properly  manage  and  control  ^11 
the  business,  property,  rights  and  affairs  of  this  Association.  They 
shall  provide  for  the  issue  and  cancellation  of  stock;  for  the  deposit 
with  and  the  withdrawal  of  funds  from  designated  depositaries; 
and  the  carrying  of  funds  in  the  office  of  the  Association  for  the 
most  convenient  transaction  of  business;  for  the  making  of  loans, 
and  no  loan  shall  be  made  until  it  has  been  approved  by  the  Board 
of  Directors;  and  they  are  hereby  authorized  to  do  all  and  singular 
the  things  necessary  to  enable  this  Association,  through  them,  to 
exercise  all  the  powers  authorized  by  law  that  are  not  inconsistent 
with  this  Constitution. 

ARTICLE  VIIL 

AMENDMENTS    TO   CONSTITUTION. 

Section  1.  This  Constitution  may  be  amended  at  any  annual  meet- 
ing of  the  stockholders  of  the  Association  by  a  two-thirds  vote  of  the 
stock  represented  in  person  or  by  proxy  held  and  voted  by  members 
of  this  Association;  provided,  however,  that  all  proposals  to  amend 
shall  be  presented  in  writing  to  the  Board  of  Directors  at  some  regular 
meeting,  at  least  thirty  days  prior  to  the  annual  meeting,  and  the 
amendment  adopted  shall  be  substantially  the  same  as  proposed. 
ARTICLE  IX. 

CONSOLIDATION   OR   DISSOLUTION. 

Section  1.  The  association  being  a  permanent  one,  it  cannot  be 
determined  at  what  time  it  shall  or  can  be  consolidated  or  dissolved. 
If,  however,  the  shareholders  desire  to  consolidate  or  dissolve  it,  a 

[401] 


APPENDIX. 

resolution  in  writing,  signed  by  members  representing  at  least  one- 
third  of  the  shares,  asking  for  such  consolidation  or  dissolution, 
must  be  submitted  to  the  Directors  at  a  regular  meeting.  The  Board 
of  Directors  shall  then  take  the  legal  course  for  calling  a  special 
meeting  of  the  shareholders  to  act  on  the  resolution.  If  two-thirds 
of  all  the  shares  vote  by  ballot  for  a  consolidation  or  dissolution  of 
the  association  it  shall  be  consolidated  or  dissolved.  The  Board  of 
Directors  shall  then  take  the  necessary  steps  to  consolidate  or 
liquidate  the  affairs  of  the  association. 


BY-LAWS. 


PRESIDENT  AND  VICE-PRESIDENT. 

Section  1.  The  President  shall  preside  at  all  meetings  of  the 
Association',  and  of  the  Directors,  and  shall  perform  such  other 
duties  as  usually  pertain  to  his  office,  or  may  be  required  of  him. 

Sec.  2.  Any  Vice-President  shall  perform  the  duties  of  the 
President  in  his  absence  or  disability. 

secretary. 

Sec.  3.  The  Secretary  shall  keep  a  complete  record  of  all  the 
proceedings  of  the  Board  of  Directors,  and  of  all  members'  meetings. 
He  shall  be  the  general  receiving,  disbursing  and  managing  officer  ot 
the  Association,  and  under  the  Board  of  Directors  and  its  commit- 
tees, and  with  the  assistance  of  such  employes  and  other  officers  as 
the  Board  may  provide,  shall  have  the  care  and  management  of  all 
the  Association's  business,  property,  rights  and  affairs,  not  otherwise 
provided  for. 

*  treasurer. 

Sec.  4.  (*  Inasmuch  as  the  Treasurer  is  optional,  associations  can 
make  their  own  provisions.) 

attorney. 
Sec.  5.  The  Attorney  shall  make  or  cause  to  be  made  all  neces- 
sary and  proper  search  and  examination  of  the  title  to  property  offered 
as  security  for  loans;  shall  see  that  the  mortgages  made  to  this 
association  or  purchased  by  it,  and  all  assignments  of  mortgages,  are 
properly  drawn,  executed  and  recorded,  and  file  with  the  secretary 
his  report  in  writing  of  the  condition  of  title  to  premises  described 
in  each  mortgage.     He  shall  represent  the  Association  in  all  legal 

[402] 


APPENDIX. 

proceedings  in  which  it  is  interested  and  shall  have  power  to  enter  its 
appearance  therein;  he  shall  give  his  advice  and  counsel  whenever 
requested,  draw  all  necessary  legal  papers  and  render  such  further 
services  as  the  Board  may  require. 

Committees  of  the  Board  of  Directors. 

EXECUTIVE   or    FINANCE    COMMITTEE. 

Sec.  6.  (As  this  varies  so  much  we  recommend  that  each  asso- 
ciation adopt  such  provisions  as  are  best  fitted  for  their  work.) 

APPRAISING  or  SECURITIES   COMMITTEE. 

Sec.  7,  (As  this  varies  so  much  we  recommend  that  each  asso- 
ciation adopt  such  provisions  as  are  best  fitted  for  their  work.) 

INDEMNITY    BONDS. 

Sec.  8.  All  officers  and  employes  who  have  charge  or  possession 
of  money,  securities  or  property,  before  entering  upon  their  duties, 
shall  give  bond  with  at  least  two  sufficient  sureties,  or  issued  by  an 
authorized  surety  company  to  the  satisfaction  of  the  Board  of 
Directors. 

TENURE   OF   OFFICE. 

Sec.  9.  All  officers  and  members  of  standing  committees  shall 
serve  until  their  successors  shall  be  chosen  and  qualified. 

MEETINGS   OF  DIRECTORS. 

Sec.  10.    Regular  meetings  of  the  Board  shall  be  held  at  the  offices 

of  the  Association  on  the day  of  each  week,  at o'clock 

m. 

Sec.  11.  Special  meetings  may  be  called  at  any  time  by  the  Pres- 
ident or  Secretary  by  notice  to  each  Director,  whenever  the  business 
of  the  Association  may  require.  A  majority  of  the  Board  shall 
constitute  a  quorum,  but  no  loan  shall  be  approved  except  by  the 
unanimous  vote  of  all  Directors  present. 

Sec.  12.     (Each  association  shall  fix  its  own  hours  of  business.) 

WHO  AUTHORIZED  TO  SIGN  FOR  THE  ASSOCIATION. 

Sec  13.  All  certificates  of  stock  and  all  releases  of  mortgages 
shall  be  signed  by  the  President  and  Secretary,  and  all  certificates  of 
deposit,  all  orders,  checks,  drafts  and  other  instruments  for  the 
receipt  or  disbursement  of  money,  and  all  other  instruments  in  writ- 
ing not  otherwise  provided  for,  shall  be  signed  by  the  Secretary  or 
disbursing  officer  or  officers. 

[403] 


APPENDIX. 


DEPOSITARIES     AND    DISBURSEMENTS. 

Sec.  14.  All  funds  shall  be  under  the  control  of  the  Board  of 
Directors,  who  shall  cause  the  same  to  be  deposited  in  the  name  of 
the  association  with  its  designated  depositary  or  depositaries,  and 
such  funds  can  be  withdrawn  from  such  depositaries  only  on 
check  signed  by  the  disbursing  officer  or  officers  for  withdrawals, 
dividends,  disbursements  on  loans,  investments,  expenses  of  manage- 
ment and  for  all  such  other  purposes  as  the  Board  of  Directors  deem 
necessary  for  carrying  on  the  business  of  the  Association. 

Sec.  15.  For  cash  payments  in  the  current  business  of  the  office 
the  disbursing  officer  or  officers  are  authorized  to  draw  money  from 
the  depositaries  of  the  Association  as  other  funds  are  withdrawn,  in 
such  sums  as  the  Board  of  Directors  from  time  to  time  may  order. 

Stock, 
running  stock. 
Sec.  16.  Members  who  do  not  pay  the  face  value  of  their  stock 
at  the  time  of  subscribing,  may  pay  the  same  in  installments  of  not  less 
than  25  cents  per  week  on  each  $100.00  thereof,  for  which  payments 
receipt  shall  be  given  them  in  a  pass-book,  and  each  member  so  paying 
shall  at  any  time  be  deemed  the  owner  of  stock  equal  to  the  balance 
of  his  credits  on  his  pass-book,  and  a  certfficate  of  paid-up  stock 
may  be  issued  for  the  even  hundreds  thereof. 

PAID-UP  stock. 
Sec.  17.    Where  the  face  value  of  the  stock  is  paid  at  the  time 
of  subscribing,  a  certificate  therefor  may  be  executed  by  the  Pres- 
ident and  Secretary  and  delivered  to  the  member. 

*LOAN  stock. 
Sec.  18.  Loan  stock  may  be  issued  at  the  option  of  the  Board  of 
Directors  to  anyone  desiring  to  make  a  mortgage  loan.  Each  owner 
of  this  stock  shall  make  such  payment  thereon  as  shall  be  agreed  upon 
in  making  the  mortgage  loam  The  Association  may,  at  its  option, 
or  when  the  member  requests  it  and  the  Association  will  consent, 
apply  the  net  credit  on  the  stock  to  the  payment  of  the  mortgage 
loan  and  the  charges  thereunder,  with  such  cancellation  of  stock  and 
reduction  of  the  general  payments  as  the  Association  will  permit. 
All  advance  payments  thus  applied  shall  be  deducted  from  the  agreed 
payment  credits. 


•  This  section  18  to  be  used  if  you  want  to  make  all  loans  bona  fide  on  stock 
and  keep  all  loan  accounts  separate  from  running  stock.  If  used  must  be  recon- 
ciled ■with  fterfinn  ?IS. 

[404] 


APPENDIX. 


PERMANENT    STOCK. 

Sec.  19.  Permanent  stock  of  the  par  value  of  one  hundred  dollars 
per  share  may  be  issued,  which  shall  constitute  the  permanent  capital 
of  the  Association,  and  cannot  be  withdrawn  until  th^  final  dissolu- 
tion of  the  Association. 

DEPOSITS. 

Sec.  20.  Special  deposits  of  money  may  be  received  by  the  Asso- 
ciation at  such  times  and  in  such  amounts  and  upon  such  terms  and 
conditions  as  the  Board  may  order  or  as  may  be  agreed  upon  at  the 
time  of  the  deposit,  and  such  special  deposits  can  be  withdrawn  only 
upon  the  same  terms  as  are  provided  for  withdrawing  members  in 
the  general  withdrawal  rule  of  this  Association,  unless  otherwise 
specially  specified  in  the  certificate  or  other  evidence  of  deposit. 

TRANSFERS. 

Sec.  21.  All  transfers  of  stock  and  deposits  shall  be  in  writing, 
properly  signed,  and  shall  not  be  valid  as  against  the  Association 
until  the  transfer  shall  be  duly  entered  upon  its  books  upon  surrender 
of  the  certificate  or  pass-book ;  and  all  stock  and  deposits  shall  be 
subject  to  a  first  lien  thereon  in  favor  of  the  Association  for  any 
indebtedness  of  the  member  to  the  Association. 

JOINT    AND    SURVIVORSHIP    ACCOUNT. 

Sec.  22.  Both  stock  and  deposit  accounts,  whether  evidenced  by 
certificates,  pass-books  or  otherwise,  may  be  issued,  carried  and  paid 
as  joint  and  survivorship  accounts,  in  the  names  of  two  or  more 
persons,  whether  adults  or  minors,  when  the  joint  owners  have  given 
to  the  Association  a  joint  order  in  substance  or  effect  as  follows : 

We,  the  undersigned  owners  of  joint 

account   No ,   in. 

Association-  of ,  Ohio,  do  hereby 

agree  and  jointly  authorize  and  order  said  Association  to  pay  any 
and  all  of  the  credits  now  or  hereafter  on  said  account,  on  the  order 
of  any  one  or  more  of  us,  both  before,  after  and  notwithstanding  the 
death  or  other  incapacity  of  any  one  or  more  of  us.  And  such  pay- 
ment shall  be  a  valid  acquittance  of  said  Association  as  against  any 
one  at  any  time  concerned. 
Done ,  191.. 


[405] 


APPENDIX. 


CANCELLATION    OF  STOCK. 

Sec.  23.  The  Board  of  Directors  may  require  any  member  to 
surrender  his  pass-book  or  certificate  and  receive  the  amount  stand- 
ing to  his  credit  together  with  all  dividends  declared  and  remaining 
unpaid  thereon  and  an  equitable  share  of  the  earnings  of  the  Asso- 
ciation since  the  last  dividend  was  declared,  to  be  determined  by 
the  Board.  All  rights  as  members  shall  cease  with  the  notice  to 
surrender. 

GENERAL  WITHDRAWAL  RULE. 

Sec.  24.  Members  and  special  depositors  whose  stock  or  deposits 
are  not  pledged  to  this  Association  may  as  a  general  rule,  upon  writ- 
ten application  to  the  Secretary,  withdraw  all  or  any  part  of  their 
stock,  credits  or  deposits  at  any  time  without  previous  notice,  but  to 
protect  the  interest  of  depositors  and  borrowers  and  avoid  sacrifice 
of  securities  notices  of  withdrawal  may  at  any  time  be  required  and 
the  liability  to  pay  further  dues,  and  the  right  to  dividend  on  stock 
credits  and  interest  on  special  deposits  shall  cease  with  any  applica- 
tion to  withdraw.  All  persons  withdrawing  shall  be  entitled  to  receive 
the  amount  of  all  credits  at  the  time  of  the  application  to  withdraw, 
less  any  member's  share  of  the  Association's  loss  in  excess  of 
the  contingent  fund.  The  required  notices  to  withdraw  shall  be 
filed  in  the  order  in  which  they  are  received  and  paid  from  the 
regular  receipts  of  the  Association-  in  the  order  in  which  they  are 
filed  as  fast  as  50  per  cent  of  the  regular  receipts  of  the  Association 
will  pay  them ;  but  the  Board  of  Directors  may,  at  its  discretion,  use 
all  the  regular  receipts  of  the  Association  to  pay  withdrawals. 

All  withdrawals  shall  be  taken  from  the  oldest  deposits  and  no 
withdrawal  from  any  one  account  or  certificate  shall  exceed  one 
thousand  dollars  in  each  thirty  days  ahead  of  other  pending  applica- 
tions for  withdrawal ;  but  the  Board  of  Directors  may,  at  its  discre- 
tion, pay  withdrawals  not  exceeding  $25  at  one  time,  nor  exceeding 
$100  within  thirty  days  regardless  of  the  order  of  application. 

Sec.  25.  In  case  of  the  loss  of  a  pass-book  or  certificate,  pay- 
ment of  the  money  deposited  thereon  may  be  made  on  such  terms  as 
the  Board  may  prescribe. 

EARNINGS. 

Sec.  26.    How  Distributed.      On  the  first  of 

and > of  each  year  the  earnings  of  the 

Association  for  the  preceding  six  months  shall  be  ascertained.     Out 
of  these  there  shall  be  deducted  and  be  applied  as  follows : 

[406] 


APPENDIX. 

First — All  expenses,  whether  paid  or  not,  and  interest  due, 

Second — Such  sum  as  the  Board  may  determine  for  the  Reserve 
Fund;  provided  that  not  less  than  the  amount  required  by  law  shall 
be  so  reserved. 

Third — Such  dividend  as  the  Board  may  declare  to  be  computed 
and  paid  as  hereinafter  provided. 

Fourth — The  residue  of  said  earnings  may  be  carried  as 
Undivided  Profits,  to  be  used  as  other  profits  in  such  way  as  the 
Board  under  the  law  may  direct ;  provided,  that  the  total  Undivided 
Profits  shall  at  no  time  exceed  3  per  cent  of  the  assets. 

DIVIDENDS. 

Sec.  27.  Such  dividend  as  the  Board  may  declare  shall  be  divided 
among  the  members  in  proportion  to  the  amount  of  money  deposited 
on  stock  by  each  and  the  length  of  time  the  same  has  been  on  deposit 
with  the  Association  less  the  withdrawals. 

PLAN  for  calculation  OF  DIVIDENDS. 

Sec.  28.  (Owing  to  the  difference  of  plans  this  is  left  to  the 
individual  associations.) 

LOANS   AND  INVESTMENTS. 

Sec.  29.  To  Whom  Made.  The  funds  of  this  Association  shall 
be  loaned  to  its  members  and  others  on  such  terms  and  at  such  rates 
of  interest  as  shall  be  fixed  by  the  Board  of  Directors. 

Sec.  30.  Security.  All  loans  made  by  this  Association  shall  be 
secured  by  pledge  of  pass-book  or  certificate  of  this  Association  on 
which  there  has  been  paid  in  a  sum  equal  to  the  amount  loaned,  which 
shall  be  known  as  temporary  loans;  or  by  first  mortgage  of  real 
estate,  which  shall  be  known  as  "Mortgage  Loans ;"  or  by  pledge  of 
such  other  securities  as  may  be  acceptable  to  the  Board  of  Directors, 
which  shall  be  known  as  collateral  loans.  But  second  mortgage  of 
real  estate  may  be  taken  where  this  Association  already  holds  first 
mortgage. 

Sec.  31.  Temporary  Loans.  These  loans  may  be  made  by  the 
Secretary  at  any  time  when  there  is  money  in  the  treasury  not  other- 
wise appropriated  and  upon  such  terms  and  conditions  as  the  Board 
may  from  time  to  time  prescribe. 

Sec.  32.  Mortgage  Loans.  Loans  on  mortgage  shall  be  made  only 
on  application  signed  by  the  borrower  or  his  agent,  and  containing 
such  information  concerning  the  security  offered  as  the  Board  may 
require.  Such  applications  shall  pass  at  once  to  the  Appraising  Com- 
mittee, who  shall  report  on  the  security  offered  as  soon  as  possible 

[407] 


APPENDIX. 

and  when  the  Board  has  si^ified  its  approval  of  the  loan,  the 
application  shall  pass  to  the  attorney,  who  shall  see  that  the  neces- 
sary papers  are  executed  and  the  loan  completed ;  provided,  the  title 
to  the  property  is  satisfactory.  Mortgage  loans  shall  be  limited  to 
.. .  .per  cent  as  nearly  as  may  be,  of  the  value  of  the  security  offered 
and  where  the  money  is  loaned  for  the  purpose  of  erecting  buildings 
on  the  property  mortgaged,  it  shall  be  advanced  as  the  building 
progresses  in  such  installments  as  the  Board  may  determine. 

Sec.  33.  Repayment  of  Loans.  Loans  may  be  made  payable  in 
fixed  annual  or  semi-annual  payments,  which  shall  be  known  as 
straight  loans  or  in  stated  weekly  or  monthly  payments,  which  shall 
be  known  as  installment  loans.  The  terms  and  conditions  of  each 
loan  shall  be  set  forth  in  the  obligation  given  by  the  borrower  for  the 
repayment  of  the  same,  but  in  all  installment  loans  the  rate  of  pay- 
ment shall  be  not  less  than  one  dollar  per  month  on  each  $100.00  bor- 
rowed, and  the  borrower's  payments  shall  be  applied : 

First — To  the  discharge  of  the  interest. 

Second — To  the  repayment  of  insurance,  taxes  or  other  charges 
against  the  borrower  provided  for  in  these  By-Laws  or  in  his 
obligation. 

Third — The  remainder  of  the  borrower's  payments  shall  be 
credited  upon  the  principal  of  his  obligation  at  such  stated  intervals 
as  the  Board  may  prescribe,  which  said  intervals  shall  also  be  stated 
in  the  borrower's  obligation,  and  interest  shall  thereafter  be  charged 
only  upon  the  amount  which  the  borrower  still  owes. 

Sec,  34.  Collateral  Loans.  Loans  on  collateral  security  shall  be 
made  only  when  there  is  money  in  the  treasury  in  excess  of  the 
demand  for  mortgage  and  temporary  loans.  The  procedure  for 
obtaining  a  loan  on  collateral  shall  as  far  as  possible  conform  to  that 
prescribed  for  obtaining  a  loan  on  mortgage. 

Sec.  35.  Insurance.  When  the  Board  of  Directors  see  fit  they 
may  require  any  borrower  to  cause  the  buildings  on  mortgaged 
property  to  be  insured  for  the  benefit  of  this  Association  against  loss 
by  fire  in  some  fire  insurance  company  to  be  approved  by  them,  in  an 
amount  which  they  shall  name,  and  to  keep  the  same  insured  during 
the  continuance  of  the  loan,  and  the  policy  of  insurance,  properly 
endorsed  by  the  Company  issuing  the  same,  shall  be  deposited  with 
the  Secretary.  Upon  the  failure  of  any  borrower  to  so  insure  said 
property  as  required,  or  upon  expiration,  or  cancellation  of  any  policy 
deposited  as  aforesaid,  the  Board  may  insure  the  same  at  the  expense 
of  such  borrower. 

[408] 


APPENDIX. 

Sec.  36.  Taxes.  If  any  property  mortgaged  to  the  Association  be 
in  default  for  non-payment  of  taxes,  the  Board  of  Directors  may 
instruct  the  Secretary  to  pay  the  same  and  charge  the  amount  to  the 
borrower. 

Sec.  37,  Interest  on  Above  Payments.  All  sums  advanced  as 
above  provided,  for  insurance  and  taxes  on  property  mortgaged  to 
this  Association,  shall  bear  the  same  rate  of  interest  as  the  principal 
debt,  and  the  mortgage  given  to  secure  any  debt  shall  also  stand  as 
security  for  the  repayment  of  such  insurance  and  taxes  an-d  the 
interest  thereon. 

Sec.  38.  Foreclosures.  If  any  borrower  shall  permit  any  pay- 
ment required  by  his  obligation  to  remain  due  and  unpaid  for  the 
period  of months,  the  entire  amount  of  such  loan  shall  there- 
upon become  due  and  payable,  and  the  Directors  may  order  such 
mortgage  foreclosed. 

Sec.  39.  Expense  of  Loans.  The  cost  of  viewing  the  property, 
examining  the  records  and  any  other  evidence  of  title,  and  preparing 
and  recording  the  mortgage  for  loans  on  real  estate  shall  be  fixed  by 
the  Board  of  Directors,  and  shall  be  paid  by  the  borrower. 

Sec.  40.  Investments.  The  funds  of  this  Association  may  be 
invested  as  provided   by  law. 

Sec.  41.  Reports.  Each  member  shall  be  entitled  to  receive  semi- 
annual or  annual  reports,  showing  the  condition  of  the  Association. 

Miscellaneous. 

Sec.  42.  Re-Issue  of  Stocks.  All  shares  withdrawn  and  forfeited 
and  all  shares  paid  up  and  the  money  thereon  withdrawn,  and  also  all 
shares  on  which  loans  have  been  taken  and  cancelled  or  paid  up, 
shall  revert  to  and  become  the  property  of  the  Association,  and  may 
be  re-issued  by  the  Board  of  Directors. 

Sec.  43.  Pass-Books.  All  pass-books  shall  be  handed  in  to  the 
Secretary  for  audit  in and of  each  year. 

Sec.  44.  Amendments.  These  By-Laws  may  be  amended  at  any 
regular  meeting  of  the  Board  of  Directors  by  a  two-thirds  vote  of  the 
Directors  present,  but  all  proposals  to  amend  the  same  shall  be  made 
in  writing  at  a  regular  meeting  of  the  Board  of  Directors,  at  least  ten 
days  before  action  is  taken  thereon. 


[409] 


APPENDIX. 


RULES. 


In  order  that  the  members  may  at  all  times  be  informed  as  to 
the  proper  rotation  or  order  of  business,  and,  particularly  for  the 
convenience  of  the  directors  themselves,  the  directors  should  adopt 
a  set  of  rules  for  governing  the  business  of  the  association.  These 
should  be  prepared  carefully  and  changed  and  amended  from  time 
to  time  as  may  be  found  necessary  in  order  to  make  them  more 
practicable  and  popular  among  the  members.  Since  such  rules  must 
be  arranged  to  suit  local  conditions  and  circumstances  it  is  not 
possible  to  outline  them  very  specifically  in  a  general  work  of  this 
character. 

The  object  of  the  business  rules  of  an  association  and  the  policy 
of  the  directors  should  be  to  have  the  business  so  arranged  that  it 
will  run  along  smoothly  and  rapidly,  without  friction  or  delay,  so  that 
members  may  not  be  annoyed  by  having  to  wait.  At  the  same  time 
the  meetings  should  be  made  of  as  pleasant  and  sociable  a  character 
as  possible  so  as  to  be  enjoyable  to  members  and  visitors.  Partic- 
ular pains  should  be  taken  by  the  directors  to  make  the  meetings 
suitable  and  pleasant  places  for  ladies  to  visit,  for  quite  a  number 
of  ladies  become  members  of  associations. 

A  few  specimen  rules  are  given  below  which  will  be  found 
suggestive : 

1.  At  the  specified  time  for  the  collection  of  dues  the  president 
shall  call  the  meeting  to  order,  and  the  secretary  and  his  assistants 
and  the  members  of  the  finance  committee  shall  take  their  respective 
places. 

2.  The  secretary  or  an  assistant  shall  enter  all  dues  paid  in  in 
the  Dues  Register  and  the  members  of  the  finance  committee  shall 
count  all  moneys  and  receipt  for  them.* 

3.  When  the  time  for  receiving  money  has  expired  the  sec- 
retaries and  the  finance  committee  shall  count  the  receipts  and  check 

•  In  some  associations  the  rule  is  that  an  assistant  secretary,  or  a  member 
of  the  finance  committee,  shall  make  the  entries  in  the  Dues  Register,  and  the 
secretary  himself  shall  attend  to  issuing  books  to  new  members  and  other  mis- 
cellaneous business  of  that  kind,  and  particularly  to  giving  information  and 
answering  the  numerous  questions  that  are  always  being  asked  by  members  in 
an  association. 

During  the  time  of  receiving  dues  the  directors  who  are  not  officers  or  mem- 
bers of  the  finance  committee  should  make  themselves  useful  by  circulating 
among  the  members  and  visitors  present,  making  them  acquainted  with  one 
another,  giving  information  in  regard  to  the  association  and  its  work,  and 
making  the  meeting  as  pleasant  and  attractive  as  possible. 

[410] 


APPENDIX. 

up  the  books  to  see  if  the  receipts  and  entries  correspond.  As  soon 
as  this  is  done  they  shall  report  to  the  president  that  they  are  ready 
to  proceed  with  the  further  business  of  the  evening, 

4.     The  following  shall  be  the  order  of  business  for  the  directors' 
meeting : 

(1)  Call  to  order. 

(2)  Roll  call. 

(3)  Reading  of  minutes. 

(4)  Sale  of  money.* 

(5)  Reports  of  officers  and  committees. 

(6)  Unfinished  business. 

(7)  Miscellaneous  and  new  business. 

(8)  Reports  of  receipts  and  disbursements. 

(9)  Adjournment. 


•  The  sale  of  money  should  be  placed  as  early  as  possible  on  the  order  of 
business  so  as  not  to  keep  members  waitingf  too  long.  The  directors'  meeting  does 
not  begin  until  after  the  time  of  receiving  dues  has  expired.  Members  who 
come  early  in  the  evening,  in  time  to  pay  their  dues,  and  are  then  compelled  to 
wait  until  the  directors  transact  all  other  business  before  they  can  bid  on  money, 
find  the  delay  very  irksome  and  annoying. 


[411] 


INDEX  OF  SUBJECTS. 


ADVANTAGES. 

Of  a  Building  Association  Loan 151 

ADVERTISING  367 

Bill    Posting : 369 

How  Should  You  Advertise 360 

Illustrations   367 

Papers   365 

Preparation  of  Advertisements 361 

Printer's  Point   System 364 

Street  Car 372 

Technical    Data 364 

Why  Should  You  Advertise? 359 

APPRAISEMENT. 

Of  Real  Estate 107 

Expert    Appraisers 109 

ASSESSMENTS    160 

ASSETS 155  and  206 

ASSISTANT    SECRETARIES 121 

ATTORNEY. 

Appointment  of,  Duties  and  Compensation 125 

Report  of 334 

AUDITING    187 

Auditor's   Certificate 208 

Auditor's  Report  on  Special  Matters 207 

Change  of  Auditors 185 

Compensation  of  Auditors 186 

Necessity  and  Object 166 

Purposes    of 170 

Qualifications    for 179 

Selecting  an  Auditing  Committee 179 

The  Auditor  the  Representative  of  the  Members 178 

[413] 


INDEX. 
B 

BALANCE. 

Balance    Sheet 177 

Cash  Balance.     See  Cash. 

Secretary's  Balance   Sheets 215 

BLANKS. 

And   Books 336 

Deposit  Envelopes  and  Slips 341 

See  Legal. 

BONDS. 

Officers' 130   and  326 

Surety   131 

BOOKS. 

And   Blanks 336 

Book  Account 338 

Building  Association  Supplies 344 

Care    of 188 

General   Suggestions 336 

Monthly  Secretary's  Book 200 

Necessary  Books  and  Forms 344 

Pass   Books .339 

Secretary's  Cash  Book 202 

Secretary's  Contribution  Book 196 

Treasurer's  Cash  Book 202 

BORROWING. 

Members    83 

Money    147 

Rights  of  Borrowers 99 

See  Duties. 

BUILDING,  LOAN  AND  SAVINGS  ASSOCIATIONS. 

Always  a  Savings  Society 5 

Articles  of  Incorporation 323 

Laws  of  Ohio 373—411 

Legal    Forms 322 

Name  and  Title 4 

Object  of  the  Associations 4 

Permanent    Plan   Associations 51 

Periodicals  Devoted  to  the  Interests 10 

Safety  of  these  Associations 84 

Serial  Associations 48  and  82 

Statistical   Information 7 

Why  Persons  Become  Members 5 

BY-LAWS. 

See  Ohio  Laws,  Appendix. 

See  Organisation 66 

[414] 


INDEX. 
C 

CALENDARS. 

Perpetual  Weekly 246 

CAPITAL  STOCK. 

See  Organization 64 

CASH. 

Balance,  Proving  It 196 

Book,  Secretary's  and  Treasurer's 202 

Book,  Treasurer's 202 

COLLATERAL  NOTE. 

On    Pass-Books 333 

See  Mortgage. 

COMMITTEES. 

Auditing   179 

CONSTITUTION. 

See  Ohio  Laws,  Appendix. 

See  Organization 65 

Statutory  and  Constitutional  Requirements 175 

CONTINGENT  FUND. 

See  Reserve  Fund 153 

CONTRACTS. 

And    Agents 141 

CO-OPERATION. 

Co-operative  Efforts  in  the  United  States 3 

Definition    \ 

Origin    1 

CORPORATE. 

Government    110 — 113 

Interests 172 

Officers — Election  and  General  Powers 115 

Rights  of  Membership 94 

Seal    139 

D 

DEPOSIT. 

Envelopes  and  Slips 341 

Stock  Certificates  of 79 

[415] 


INDEX. 

DEXTER'S  RULE 309 

DIRECTORS. 

Duties   of 123 

Salary.     See  Remuneration. 

DISTRIBUTION  OF  EARNINGS. 
See  Tables. 

Serial   Plan 302 

Permanent  Plan 252 

DIVIDENDS  96 

Calculation  of,  Permanent  Plan 252 

Payment    160 

2H%   Semi-Annually 244 

DIVISION  OF  PROFITS. 

Serial   Plan 303 

Under  Dexter's  Rule  and  Partnership  Plan 303 

DUES  74 

See  Stock  Payments. 

DUTIES. 

Of  Attorney    125 

Of  Borrowers    101 

Of  Directors   123 

Of  Members    91 

Of  Officers    117 

Of  President  and  Vice-Presidcr.t 119 

Of  Secretary  120 

Of  Treasurer   121 

Of  Trustees  124 


£ 

EARNINGS. 

Distribution  of— See  Serial  Plan 302 

See  Tables. 

ELECTION. 

And  Duties  of  Officers 117 

See   Corporate 115 

EXAMINATIONS. 

State 166 

[416] 


INDEX. 

EXEMPTION  FROM  TAXATION 39  and  40 

FINES   AND   FORFEITURES 92 


FORMS. 

Mechanics'   Lien 333 

Of   Associations 47 

See  Blanks. 
See  Books. 
See  Legal. 

G 

GENERAL. 

Ledger    205 

Manager    122 

H 

HISTORY. 

Early  History  in  the  United  States 16 

Future  of  the  Movement 23 

Historical    Review 13 

Movement  in  France 16 

Societies  in  England 13 


I 

INCORPORATION. 

See  Building,  Loan  and  Savings  Associations. 
See  Organisation. 

INSURANCE. 

Health,  Accident  and  Disability 8tt 

Life    87 

Mortgage  Clause  for  Policies 330 

Policies  as  Collateral  Security 167 

Tornado    87 

INTEREST. 

Calculation — Permanent  Plan 262 

Compound.     See  Tables. 

Rebate.     See  Tables. 

Simple    Tables .319 

INVESTORS. 

Rights  as 96 

(417] 


INDEX. 

J 

JUVENILE   SAVINGS 348—356 

L 

LAW. 

See  Legislation. 

Laws  of  Ohio  Relating  to  Building  and   Loan   Associa- 
tions.    See  Appendix 373—411 

LEAGUES. 

County,  City  and  Local 27 

International    27 

Membership    29 

Organization  of  State  Leagues 26 

Purposes    of 25 

Resume    31 

United  States  League 25 

What  a  League  Can  Do 28 

LEASEHOLDS    159 

LEDGER. 

General   205 

Members'    204 

LEGAL  FORMS. 

Articles   of   Incorporation 323 

Attorney's   Report 334 

Bond  of  Officers 326 

Certificate  of  Paid-Up  Stock 335 

Collateral  Note  for  Loan  on  Pass  Book 333 

For  Associations 322 

Mechanics'   Lien 333 

Mortgage 327 

Mortgage  Clause  for  Insurance  Policies 330 

Mortgage  Collateral  Note  on  Shares  of  Stock 332 

Proxy  on   Stock 325 

Subscription   List 325 

LEGISLATION. 

Defects  in  the  English  Law 35 

Exemption  from  Taxation 39  and  40 

In  England 33 

Its  Necessity 32 

Laws  in  the  United  States 36 

Laws  of  Ohio.     See  Appendix. 

Litigation 38 

Provisions  of  the  English  Law 35 

Statesmen    Who    Have    Been    of    Direct    Benefit    to   the 

Movement    41 

Taxation 32,  42,  46 

[418] 


INDEX, 

LIABILITIES   2M 

See    Pozvers 13S 

LOANS. 

Loans  and  Securities 102 

Mortgage    104' 

Nature   of 103 

Other    Securities 105 

See  Advantages. 

Straight    Mortgage 109 


M 

MANAGEMENT. 

General    Manager 122 

Of   Corporate    Meetings 113 

MECHANICS'  LIEN. 

Form    for 333 

MEETINGS. 

Corporate   110—113 

See    Organization 70 

MEMBERS. 

Borrowing  83 

Corporate  Rights  of 94 

Duties    of 91 

League  Membership 29 

Members'    Ledger 204 

Membership  90 

Protection   of 173 

Riehts    of 94 

METHODS. 

Economical,  Labor-Saving  and  Simple 176 

MISTAKES   191 

MORTGAGE. 

Clause   for  Insurance  Policies 330 

Collateral  Note  on  Shares  of  Stock 332 

Custody — Recording   156 

Legal   Forms 327 

Mortgages   104 

Straight  Mortgage  Loans 109 

[419] 


INDEX. 
N 

NAME. 

Choice  of 63 

NOTE. 

Collateral  Note  for  Loan  on  Pass-Book 333 


o 

OFFICERS. 

Bonds  of 130  and  326 

Corporate   115 

Duties  117 

Election 117 

Remuneration 133 

Required 117 

Responsibility    of 132 

See  Organisation 68 

OHIO. 

Laws  Relating  to  Building  and  Loan  Associations 373—411 

ORGANIZATION. 

By-Laws  66 

Capital   Stock 64 

Choice    of    Name 63 

How  to  Organize 61 

Incorporation    67 

Meetings 70 

Of   Officers 68 

Of  State  Leagues 26 

Preliminary   Steps 62 

The  Constitution 65 


P 

PARTNERSHIP  RULE. 

Application   of 309—317 

PASS  BOOKS. 

Collateral  Note  on  Pass  Book 353 

See   Books 339 

PERIODICALS. 

Devoted  to  the  Interests 10 


[420] 


INDEX. 

PERMANENT  PLAN. 

Application    of    Profits 253 

Associations    51 

Calculation  of  Dividends  and  Interest 252 

Calendars   246 

Reports 220 

System    1 253 

System  II 277 

PERPETUAL  PLAN. 

See  Permanent  Plan. 

Succession    139 

POWERS. 

And   Liabilities 139 

Dissolution  144 

Earning — See  Tables. 

General    139 

See    Corporate 115 

Special    144 

Suits    148 

PREMIUMS. 

See  Loans 102 

PRESIDENT. 

See  Duties 119 

PROCEEDS. 

Disposition  of 10€ 

PROFITS. 

Application   of 263 

Division  of 309 

See  Serial  Plan 303 

Undivided    154 

PROXY. 

On  Stock — See  Legal  Forms 326 


Q 

QUESTIONS. 

Assets   15S 

Borrowing  Money 147 

Practical    147 

[421] 


INDEX. 
R 

REAL  ESTATE. 

Appraisement    107 

REMUNERATION. 

Of  Attorney 125 

Of  Auditors 186 

Of   Directors 134 

Of   Officers 133 

Of  Secretary 138 

REPORTS. 

Attorney's    334 

Auditor's 207 

Legal  Requirements .- 213 

Necessity  of 212 

Permanent  Plan 220 

Preparation    214 

Publication    214 

Serial   Plan 216 

Specimens    216 

REQUIREMENTS. 

Statutory  and  Constitutional  Requirements 175 

RESERVE  FUND. 

See  Contingent  Fund 153 

RIGHTS. 

Borrowers'    99 

Corporate  Rights  of  Members 94 

Investors' 96 

Members'   94 

Of  Withdrawal 97 

RULES    143 

Partnership   Rule 317 

Rules   and  Tables  Exemplifying  the   Division   of   Profits 

Under  Dexter's  Rule  and  the  Partnership  Rule 309 

s 

SAFETY. 

Of  Building  and  Loan  Associations 84 

SALARIES.     See  Remuneration. 

[422] 


INDEX. 


SEIAL.     See  Corporate. 


SECRETARY. 

Assistants    121 

Cash   Book 203 

Contribution    Book 196 

Monthly  Secretary's  Book 200 

Salary 138 

See  Duties 120 

SECURITIES 105—106 

SERIAL  PLAX. 

Associations 48  and  82 

Division  of  Profits 303 

Distribution  of  Earnings 302 

Reports    216 

STATE. 

Examinations    166 

Leagues — Organization    26 

Supervision    •. 210 

STOCK. 

As   Property 73 

Assignment   of 105 

Capital  64 

Certificates  of   Deposit 79 

Definition   81 

Difference    Defined 81 

Increase    73 

Paid-up  Stock    75 

Paid-up  Stock  Certificate,  Legal  Forms 335 

Payments  or  Dues 74 

Proxy — Legal  Forms 325 

Shares   Transferable 74 

Stock  and  Stockholders 72 

SUBSCRIPTION. 

List— Stock    325 

SUITS. 

See   Powers 14S 

SUPPLIES. 

Building   Association 844 

SYSTEMS. 

See  Permanent  Plan. 
See  Serial  Plan. 

[423] 


INDEX. 
T 

TABLES. 

3      percent 255  and  266 

3  per  cent 256  and  267 

4  per  cent 257  and  268 

5  percent 258,  269  and  289 

554  per  cent. 290 

5^  per  cent 291 

5M  per  cent 292 

6  per  cent 259,  270  and  293 

6%  per  cent 294 

6^  per   cent 295 

6}i  per   cent 296 

7  per  cent 260,  271  and  297 

7J4  per  cent 298 

IVz  per  cent.. 299 

7^  per  cent 300 

8  per  cent 261,  272  and  301 

9  per  cent 262  and  273 

10  per  cent 263  and  274 

11  per  cent 264  and  275 

12  per  cent 265  and  276 

4      per   cent 285 

4J4  per  cent 286 

4H  per  cent 287 

4K  per  cent 288 

Of  Earning  Powers 306—308 

Rebate  and  Compound  Interest 221 

Summarized  Time  Table — 1  to  26  weeks .,  279 

Time    280—284 

TAXATION. 

Exemption    from 39 — 40 

See  Legislation. 

Taxes  and  Assessments 160 

Terminating    Plan 47 

TREASURER. 

Duties  of 121 

Cash   Book 202 

TRUSTEES. 

Duties  of 124 


u 

UNDIVIDED  PROFITS 154 

UNITED  STATES  LEAGUE 25 

[424] 


INDEX. 
V 

VICE-PRESIDENT. 

Duties   11» 

w 

WITHDRAWALS  204 

Rights 97 


[425] 


Building  and  Loan  Association 
Supplies  a  Specialty. 


Having  been  in  this  line  of  busii  ess  over 
twenty  years,  we  are  in  a  position  to  furnish 
you  with  anything  you  may  desire. 


|L  ASSOCIATIONS  WOULD  DO  WELL 
^  TO  CONSULT  US  BEFORE  BUYING 


We  make  a  study  of  designing  and  improving 
books  for  the  convenience  of  the  Associa- 
tion.     They  are  both  practical  and 
labor-saving.     Prices  on  request 
and  inquiries  cheerfully 
answered. 


}V£  HAVE  UNEXCELLED  FACILITIES  TO  DO 

ALL  KINDS  OF 

PRINTING  OF  CONSTITUTIONS, 

Br-LAWS,  REPORTS,  ETC 


Hie  American  Building  Associain  News  Co. 

15-27  W.  6th  Street.  Cincinnati.  O. 


NEW  PUBLICATIONS 

Robinsonian  Installment  Loans 

Scries  i. 

FOR  FINDING  AS  FOLLOWS: 

Ist.  When  any  loan  will  be  paid  up  by  monthly  payments. 
2nd.  The  unpaid  balance  on  such  loans  at  any  time; 
3rd.  Amount  of  interest  that  has  been  earned. 

Price,  $2.00. 


ACCOMPANIED    BY 

Tables  showing  what  $100  or  $90  amounts  to  in  any  number  of  months 
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Also  what  $1  paid  at  the  end  of  each  month  amounts  to  for  the  same 
periods.     All  at  monthly  compound. 


COMPUTED,    PUBLISHED  AND   FOR  SALE  BY 

U.  WATTTS    ROBIINSOIV,  U.  S.  IN.  A. 

Author   and   Publisher   of   the   Robinsonian    Series  of   Reference   Books   for   all 
Banks,  Trust  and  Insurance  Companies,  Railroads,  and,   fact,  for 
everyone   who  has  to   do   with   figures. 


Copyright,  1908,  by  J.  Watts  Robinson. 


ROBINSONIAN 
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Pf  Ice,  $2.00. 


Showing  both  the  monthly  and  semi-annual  payments  required  to  pay 
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SEND  ORDERS  TO  THE 

American  Building  Association  News, 

15  W.  Sixth  Street,  Cincinnati,  O. 


Attention  is  called  to  the  enumeration  below  of  the 
contents  of  the 

ROBINSONIAN 
Building-Loan  Interest  Tables 

Price,  $5.00. 

which  are  now  recognized  throughout  the  United  States  and  Canada  as  the 
authoritative  reference  tables  for  all  building-loan  calculations,  as  well  as  for 
many  other  classes  of  money. 

1st. — Useful  Rules  and  Information. 

Q. — Division  Key-Table. — For  finding  the  rate  earned  by  a  loan,  etc. 
No,   1. — Amount  of  $1. — For  finding  what  any  sum  of  money  amounts  to  at  any 

rate  of  interest,  compounded  monthly,  up  to  150  months. 
No.  2. — Amount  of  $1  per  Month,  etc. — For  finding  what  any  sum  paid  each 

month,  etc.,   amounts   to,   up   to   150  months,   with    interest  compounded 

monthly. 
No.  3. — Present  Worth  of  $1. — For  finding  the  present  worth  of  any  sum  due 

at  any  future  time. 
No.  4. — Present  Worth  of  $1  each  Month,  etc. — For  finding  the  present  worth 

of  any  sum  due  each  month,  etc. 
No,  5  and  8. — Sinking  Fund  Tables. 
No.  6. — Amount  of  $1  Paid  each  Week,  with  interest  compounded  Semi-annually 

— and  Maturity  Key-Table. 
No.  7. — Perfect   Maturity  Tables. — Maturity  of   Installment   Stock,   with  pay- 
ments  from   20  cents  to   $10.00   and  rates   from   4%    to   30%,   including 

10.2%  and  13.2%. 
No.  7a. — Supplement  to  No.  7,  for  payment  at  end  of  month. 
No.  8a. — Maturity    of    Prepaid    Stock. — Prepayments   from    $25.00   to  $80.00, 

and    rates   'same  as  next  above. 
No.  9. — Equivalent  Mqnthly  and  Prepaid  Payment,  that  will  mature  in  same 

time. 
No.  12. — Equal  Monthly  Payments,  made  at  the  end  of  each  month,  that  will 

pay  up  a  $100  loan  at  6,  8,  10  or  12%  per  annum. 
No.  12. — Same,   when   interest   on   the  loan  is   payable  monthly  in  advance,   and 

Payments  are  at  the  first  of  each  month. 
AME,   when  interest  on   the  loan  is  payable   monthly  in  advance,  with 

payments  at  end  of  the  month. 
No.  15. — Equal  Monthly  Payments,  made  at  the  beginning  of  the  month,  that 

will,    at   any   rate    from    1%    to    25%    per   annum,    interest  compounded 

annually,  pay  a  loan  of  $100  in  from  1  to  25  years. 
No.  16. — Monthly   Sinking  Fund,  that  will  pay  up  quarterly,  semi-annual,  or 

annual   dividends  and  expense;   also  Amount  of   $1   paid  either  at  the 

first  or  lasft  of  the  month  for  3,  6  and  12  months,  at  any  earning  rate 

from  3%  to  60%. 
No.  17. — Division  of  Profits. 
No.  18. — Present  Worth,  at  monthly   Compound,   of  $1.00  due  at  the  end   of 

each  half  year,  showing  what  portion  of  the  pre-payment  is  required  to 

pay  off  quarterly,  semi-annual,  or  annual  dividends  and  expense. 
No.  18a. — The  Same  as  No.  18,  but  with  interest  compounded  semi-annually. 
No.  19. — Comparative  Interest  Table,  showing  what  $1.00  amounts  to  in  any 

number  of  years  up  to  15,  at  Simple  interest,  and  at  monthly,  quarterly, 

semi-annual  and  annual  compound. 
No.  19a. — Comparative   Interest  Table,   showing  what  $1.00   paid  each  month 

amounts  to  in  any  number  of  years  up  to  15,  at  simple  interest,  and  at 

monthly,  quarterly,  semi-annual  and  annual  compound. 
No.  20. — Withdrawal  Values,  at  any  rate  of   Simple  interest  allowed,   and  at 

any  time  from  1  to  150  months. 
No.  21. — Rates   earned   by    a   loan,    and    actual   rates   paid   by   a  borrower    in    a 

Building-Loan  Association,  when  the  loan  is  paid  up  in  a  given  time  by 

equal  monthly  payments. 
No.  22. — For  finding  the  payment,  made  at  the  end  of  each  month,  etc.,  which 

will  at  last  nayment,  pay  a  debt  now  due  and  its  interest. 
Table  A. — Maturity  Key-Table. — For  finding  either  the  Payment,  par  value  of 

Share,  Earning  Rate,   or  Time  to  maturity,  when  we  know  the  other 

three. 
And  many  other  useful  Tables  too  numerous  to  mention  here. 

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American  Building  Associatian  News,  15  W.  6th  Si,  Cincinnati 


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